President Uhuru Kenyatta has assented to four Parliamentary Bills. The bills include the Appropriation Bill 2021, the Second Supplementary Appropriation Act 2021, the County Allocation of Revenue Act, and the Finance Bill 2021.
“With the Presidential Assent of these critical legislative instruments that anchor the Financial Year 2021/2022 budget, Kenya’s public finance sector is on a stronger foundation to spur economic growth, fund critical development projects within the Big Four and other seminal initiatives,” State House said in a statement.
In the Finance Bill, new taxes have been introduced on airtime and betting, allowing KRA to start collecting the duties from 1st July 2021
MPs increased excise duty on airtime and data from 15 percent to 20 percent, which will see the Treasury raise at least Sh8 billion from Safaricom, Airtel and Telkom Kenya.
Parliament agreed to cut the 20 percent tax on winnings from gambling to 7.5 percent, a boost to gamblers and blow to the Treasury. The MPs also lowered the Treasury’s proposal to reintroduce excise duty on betting stakes to 7.5 percent from 20 percent that the State had published at end of April through the Finance Bill, 2021.
The 20 percent tax on betting stakes was introduced in 2019 but Parliament removed it last year through amendments to the Finance Act, 2020 following lobbying by betting firms. Punters currently pay 20 percent on their winnings but the parliamentary committee reduced it to 7.5 percent, saying the current taxation regime for betting is too high and has put off investors. Mr Kenyatta’s approval of the Finance Act before July 1 is a boost to the KRA that has in the past grappled with months of delay or rejection of the Bill. The President has powers to back or reject the new taxes that MPs introduce in the government-backed Finance Bill. He, for instance, rejected the Finance Bill in 2018 and 2019, leading to delays in imposing new taxes and other regulations.
The 20 percent excise duty on loan fees will see banks pay the taxman more than Sh7 billion annually, which risks making credit costly for homes and businesses as lenders transfer the burden to borrowers.
Safaricom on Tuesday warned that it would increase airtime and Internet charges if the President backed the MPs’ proposal to raise excise duty by five percentage points.
“This being a consumption tax, the burden, unfortunately, has to be absorbed by customers,” Peter Ndegwa, the Safaricom CEO, said.
