CS MBADI moves to make the lives of employers a living hell as he imposes new tax deductions and hefty penalties on them – Look!

Wednesday, November 6, 2024 – The Government of President William Ruto has moved to make doing business in Kenya more difficult.

This is after Treasury Cabinet Secretary John Mbadi imposed hefty penalties and more tax deductions on employers in the proposed tax bills.

In one such bill, even though the Finance Act 2023 amendment had made the withholding tax collections due within five working days without any defined penalties, the new proposal seeks to take away this relief.

If the new amendment bill passes, employers and individuals who remit withholding tax will be charged a hefty amount for failing to adhere to this time limit.

In the Finance Bill 2024, the government also sought to introduce a withholding tax on goods supplied to public entities at a three per cent rate for residents and five per cent for non-residents.

Withholding tax is a type of income tax paid to the government by the payer of the income or the employer rather than by the recipient of the income or the employee. 

It is deducted at the source and charged to the employer instead of from the employee and is significantly lower than the Pay-As-You-Earn (PAYE) Tax.

Another proposal in the bill that has been basically plucked from the Finance Bill 2024 and could highly impact what employers remit to their employees is the one proposing an increase in the monthly deductible for pension contributions. 

If this is enacted, it could transition the pension sector from Exempt-Exempt-Exempt to Exempt-Exempt-Tax increasing the contributions from Ksh20,000 to Ksh30,000.

The Kenyan DAILY POST