The finance Act of 2022 amended the Income Tax Act [ITA], by increasing the rate of capital gains tax [CGT] from 5% to 15%. The tax took effect from 1st January 2023. The capital Gains Tax [CGT] is a tax that applies to the sale or transfer of property located in Kenya that was acquired on or after January 2015.
Foreign traders who benefit from local-based derivative contracts will be subject to a 15% withholding tax starting in 2023. This will be imposed on any profits made from these contracts . A derives is a financial instrument that derives its value from an underlying asset, such as a currency, commodity, or security.
Multinational tech companies have also announced that they will begin applying a standard 16% Value Added Tax [VAT] on electronically supplied services such as streaming movies on Netflix or listening to music on Spotify , as the government looks to tap into the growing digital market in the country.
First among the taxes is the 20% Excise Tax on transactions between mobile wallets and banks. Banks have already started charging the tax in addition to the reintroduction of fees on mobile-to-bank transactions and vice versa.
The Kenya revenue Authority [KRA] has appealed to the supreme court to overturn a lower court ruling that blocked the implementation of a mandatory 1% gross turnover minimum tax. The minimum tax is a flat tax that applies to companies that have a turnover of less than sh5 million per year.