Sharp Daily
No Result
View All Result
Friday, June 6, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

VAT exemptions under scrutiny as treasury proposes tax reforms

Brian Murimi by Brian Murimi
June 13, 2024
in News
Reading Time: 2 mins read

Cabinet Secretary for the National Treasury and Economic Planning, Prof. Njuguna Ndung’u, has proposed a sweeping rationalization of the country’s Value Added Tax (VAT) regime. The overhaul seeks to address the substantial loss of revenue caused by tax expenditures, estimated at a staggering 2.9% of Kenya’s Gross Domestic Product (GDP) in 2022.

The proposed changes, outlined in the Finance Bill, 2024, target the VAT exemptions and zero-rating provisions, which have long been exploited for tax planning purposes, leading to revenue leakages. In an effort to create a more equitable and efficient tax system, Prof. Ndung’u announced three key criteria for the VAT restructuring.

First, all finished goods currently exempt from VAT will be subjected to the tax. “We propose that all finished goods currently exempt be subjected to VAT,” Prof. Ndung’u stated in his budget statement. This move aims to broaden the tax base and ensure that consumers contribute their fair share to the government’s revenue pool.

Second, goods and services currently zero-rated under the VAT Act will be reclassified as exempt from VAT. “Zero rated finished goods and services be exempt from VAT,” the Cabinet Secretary explained, indicating a shift in the treatment of these items.

RELATEDPOSTS

Kenya’s debt and liquidity crisis looms, Njuguna Ndung’u warns Mbadi

August 13, 2024

Treasury CS Mbadi vows to integrate payroll with IFMIS in cost-cutting drive

August 12, 2024

Third, and perhaps most significantly, zero-rating will be restricted solely to goods and taxable services intended for export. Prof. Ndung’u emphasized, “Zero rating be restricted to goods and taxable services meant for export.” This measure is designed to promote Kenya’s export competitiveness while ensuring that domestic consumption contributes to the country’s tax base.

The proposed amendments to the First and Second Schedules of the VAT Act will lead to a significant expansion of the VAT tax base and create a more level playing field for businesses operating in the Kenyan market. “This rationalization is expected to expand the VAT tax base and create fairness in taxation,” Prof. Ndung’u asserted.

The CS acknowledged the challenges faced by Kenyans due to the rising cost of living but emphasized the necessity of these reforms. “We urgently need to address the challenges that negatively affect our revenue collection,” he stated, underscoring the government’s commitment to fiscal consolidation and sustainable economic growth.

The proposed VAT overhaul is part of a broader tax policy reform agenda outlined in the Medium Term Revenue Strategy, aimed at enhancing domestic resource mobilization and reducing Kenya’s reliance on external borrowing. If implemented, the changes could have far-reaching implications for businesses, consumers, and the overall economic landscape of the country.

 

Previous Post

Police officer opens fire in court, injuring magistrate

Next Post

Njuguna Ndung’u: Kenya to adopt accrual accounting from July 1

Brian Murimi

Brian Murimi

Brian Murimi is a journalist with major interests in covering tech, corporates, startups and business news. When he's not writing, you can find him gaming, watching football or sipping a nice cup of tea. Send tips via bireri@thesharpdaily.com

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

How Kenya’s E-Mobility shift could redefine urban planning

June 5, 2025

Economic liberators are the real heroes and heroines of the year

June 5, 2025

Affordable retirement planning for small businesses with CURBS

June 5, 2025

How Kenyan banks can modernize without marginalizing

June 4, 2025

Human rights concerns over activists’ treatment in Tanzania

June 4, 2025

Decoding stock-based compensation

June 4, 2025

Comparative advantage is the secret to real economic take off

June 4, 2025

Understanding inflation and its impact on everyday life

June 4, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024