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Traders Who Sell More Than Ksh1,400 a Day Among Casualties of Finance Bill 2023
Traders Who Sell More Than Ksh1,400 a Day Among Casualties of Finance Bill 2023
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Traders Who Sell More Than Ksh1,400 a Day Among Casualties of Finance Bill 2023

Money254
Tony Mukere
May 26, 2023

Formal and informal traders who sell more than Ksh1,369 a day are among the casualties of the Finance Bill 2023 which is set to become law if passed by Parliament. 

The proposed law seeks to increase the turnover tax from one to three per cent of their gross revenues. The minimum turnover for qualifying businesses was also lowered from Ksh1 million annually, to Ksh500,000 over the same period. 

The tax applies before the deduction of expenses. It also applies regardless of whether the business has made a profit or not. The proposed amendment of the law seeks to raise about Ksh2.8 trillion which the National Treasury estimates to be lost tax revenues - particularly in the informal sector. 

“Section 12C of the Income Tax Act is amended in subsection (1), by deleting the words “one million shillings but does not exceed or is not expected to exceed fifty million shillings” and substituting therefor “five hundred thousand shillings but does not exceed or is not expected to fifteen million shillings,” the Finance Bill 2023 reads in part. 

National Tax Policy

Examples of businesses that are likely to fall within the purview of this law include kiosks, food joints popularly known as vibandas, butcheries, and market traders popularly known as mama mbogas. 

The proposal comes amid the introduction of the National Tax Policy by the National Treasury. Among the changes made was the empowerment of KRA staff to visit informal businesses and make assessment reports on the taxes due. 

Also Read: KRA Asks Kenyans to Update Bank Account, Other Details on iTax Portal

President Uhuru Kenyatta had in March 2020 reduced the turnover tax from 3 to 1 percent to cushion small businesses that were hard-hit by the effects of the pandemic. 

Housing Fund

On Thursday, May 25, the National Assembly’s Finance and Budget Committee completed the process of collecting public petitions as part of the public participation process. There were more than 1,300 petitions submitted, and an overwhelming majority of them pleaded with Parliament to remove the increment in various taxes. 

A number of petitioners also called on MPs to suspend the controversial Housing Levy which proposes to introduce a mandatory 3% salary deduction on employed Kenyans.

The deductions will be matched by employers and will create the National Housing Fund - money that will be set aside for construction of affordable housing units in urban areas.

 The Kenyan Association of Manufacturers, the Federation of Kenyan Employers (FKE) and the Kenya Private Sector Alliance (Kepsa) are among those who called for a review of the bill. 

Mukere is a digital journalist based in Nairobi. He is passionate about writing and shaping stories that make the world a better place. Connect with Mukere on LinkedIn.

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