News and Analysis
December 13, 2024
From the news that EPRA could be doubling the Petroleum Regulatory Levy further increasing the cost of fuel and electricity, to the new battleground between KRA and lawyers over client cash held in banks, plus details of diaspora remittances and the government's bilateral talks with Saudi Arabia to secure jobs for Kenyans and a look at the newest mobile money scam in Kenya that is targeting traders - your Tuesday money Brief from Money254.
The cost of fuel and electricity is set for yet another rise if a proposed law to double the Energy Petroleum Regulatory Authority (Epra) Levy is okayed by Parliament.
The Epra Levy is charged on both electricity and fuel to support the operations of the regulator with records indicating that this forms over 90% of the authority’s revenues.
The Statute Law (Miscellaneous Amendments) Bill, 2023 that is fronted by National Assembly Majority Leader Kimani Ichung’wah is proposing an amendment to the Epra Act of 2019 by doubling the levy to 1% from the current maximum of 0.5%.
Currently, Kenyans pay a Petroleum Regulatory Levy of Ksh0.25 on every litre of kerosene, diesel and petrol. Additionally, for each unit of electricity, a Ksh0.08 Epra Levy is currently charged.
With the two levies forming the majority of the authorities revenues, a drop in consumption of fuel products and electricity directly affects the authority’s budget. The proposed doubling of the levy is aimed at enhancing its operations but comes with a cost of increasing the cost of power and electricity on a population already overburdened by rising costs.
This coming just days after president William Ruto promised Kenyans to expect reduced fuel prices starting December. Speaking in Kirinyaga County on Saturday, November 18, President Ruto said his administration was working towards stabilising fuel prices.
“You have seen that this month the prices have started to decrease. Next month, they will go down even further,” said Ruto who also defended the controversial G-to-G fuel deal.
The Kenya Revenue Authority (KRA) is facing backlash from lawyers as it attempts to collect taxes on interest earned from billions held in client accounts.
The KRA, which in this financial year seeks to achieve a revenue target of Ksh2.57 trillion, has demanded tax details from law firms, some dating as far back as five years - according to correspondence obtained by the Business Daily.
Lawyers argue that the taxman is on a fishing expedition, wrongly targeting their members. The dispute centres on interest earned in client accounts, which lawyers contend is transmitted to clients.
The Law Society of Kenya (LSK) is urging aggrieved members to formally submit complaints, threatening legal action if the KRA doesn't comply.
The move comes as the government aims to reduce debt vulnerabilities and improve tax compliance, with high net-worth individuals and professionals identified as contributors to the tax gap.
In October, Kenyans abroad sent home an additional Ksh2.3 billion, marking a 6.9% increase in remittance inflows from September.
The total remittances for the 12 months to October 2023 reached $4,165 million (Ksh634.9 billion), a 4.2% increase from the same period in 2022.
The rise in remittances could be influenced by easing inflationary pressures in key markets and the weakening shilling against the dollar.
Despite the additional remittances, Kenya's forex reserves continued to decline, reaching $6,785 million, equivalent to 3.6 months of import cover, below the statutory requirement of four months.
The US remains the largest source of remittances, contributing 54% in October 2023, with Saudi Arabia emerging as a significant contributor.
In Brief:
There is a new scam in town targeting Kenyans receiving payments via mobile money.
With more businesses including informal ones such as roadside sellers being open to accepting mobile money payments, con artistes are now using apps to mimic genuine mobile money confirmation messages to steal from unsuspecting traders.
Reports of the prevalence of this activity have been trending on social media with Kenyans and past victims warning each other of the newest con trick in town.
“Time ya ku edit huyu ali sahau kuweka coma. Kuna this app on the playstore inaitwa "Fake Text" Kenyans wanaitumia pale kwa matatu ndio wasilipe fare. Na pia kwa clubs and hotels. Kama wewe ni waiter/waitress it's just a matter of time before you understand what I'm talking about,” a user posted on X.
Replies to some of the warning messages shows apparent widespread acceptance of this “street smartness” underscoring the importance of traders independently confirming receipt of funds prior to offering a service or allowing a customer to leave.
“Business owners should always insist on seeing payment reflecting on their phones. Better being safe than sorry,” one X user advises.
.png){kind=small}
Join 1.5M Kenyans using Money254 to find better loans, savings accounts, and money tips today.
Money 254 is a new platform focused on helping you make more out of the money you have. We've created a simple, fast and secure way to find and compare financial products that best match your needs. All of the information shown is from products available at established financial institutions that our team of experts has tirelessly collected.
.jpg)
