The Federation of Kenya Employers (FKE) is proud to highlight the major wins resulting from her advocacy efforts, as reflected in the *Report of the Departmental Committee on Finance and National Planning on the 2024 Finance Bill* tabled before the National Parliament. These achievements represent our ongoing dedication to advancing the interests of the business community and fostering a conducive environment for economic prosperity.
1. Motor Vehicle Tax (Clause 9 (12H)
FKE Proposal: Reconsider or delete the 2.5% motor vehicle tax due to its potential financial burden and double taxation on vehicle owners.
Committee Observations: The Committee accepted the proposal to delete the motor vehicle tax, noting its adverse effects on insurance, double taxation, and discrimination.
2. Eco Levy (Clause 45)
FKE Proposal: Delete the eco levy to avoid increased costs for consumers and businesses.
Committee Observations: The Committee proposed applying the eco levy only on imported finished products, protecting local manufacturers while addressing environmental concerns.
3. VAT on Financial Services (Clause 34 (b) (i)
FKE Proposal: Delete the proposal to introduce 16% VAT on financial services due to its impact on cost and financial inclusion.
Committee Observations: The Committee accepted the proposal to exempt financial services from VAT to prevent increased costs and negative impacts on financial inclusion.
4. Excise Duty on Vegetable Oil (Clause 42 (a) (i) (P)
FKE Proposal Delete the 25% excise duty on vegetable oil to prevent economic hardship for low-income households.
Committee Observations: The Committee accepted the proposal to exempt excise duty on vegetable oils, mitigating price increases.
5. VAT on Ordinary Bread (Clause 35 (a)
FKE Proposal: Delete the proposal to introduce 16% VAT on ordinary bread to avoid additional consumer burden.
Committee Observations: The Committee agreed with our proposal and deleted the introduction of VAT on ordinary bread, ensuring staple items remain affordable.
6. Digital Service Tax (Clause 8 (12E) (1)
FKE Proposal: Delete the proposal to introduce a significant economic presence tax at an effective rate of 6%, which could disadvantage local businesses and discourage multinational companies.
Committee Observations: While the Committee acknowledged the high profit margins of digital service providers, it did not accept the proposal for deletion. However, it proposed to reduce the deemed income rate from 20% to 10% of gross turnover.
7. VAT on Unleavened Bread (Clause 34 (a) (i) (Ad)
FKE Proposal: Delete the proposal to introduce 16% VAT on unleavened bread to avoid burdening consumers.
Committee Observations: The Committee agreed with our proposal and deleted the introduction of VAT on unleavened bread, guided by the policy to zero rate critical consumption items.
8 . Deferred Realized Foreign Exchange Loss (Clause 4)
FKE Proposal: Retain the period for claimable deferred realized foreign exchange loss at 5 years instead of reducing it to 3 years to prevent potential harm to taxpayers.
Committee Observations: The Committee agreed with our proposal and retained the current 5-year period, acknowledging the necessity for businesses to recover foreign exchange losses over a longer duration.
These successes underscore our effective advocacy for a conducive business environment. We remain committed to working with all stakeholders to promote policies that support sustainable economic growth and the interests of employers.
Thank you for your continued support and engagement.
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A detailed Report of the Finance Committee is available in the download section of the FKE website from pages 283 to 287 of the report.