I stumbled upon a copy of
KRA's Staff Advice Memo on the effect of Kimunya's
2006/7 budget to Kenya's tax laws. Some interesting items caught my eye:
1.
Turnover TaxKimunya introduced a tax targeted at SME's and other organisations that have annual turnover of less than 5m. The Govt. will henceforth levy a 3% tax on their gross receipts. The logistics on this is still underway.
2.
Road Maintenance LevyKimunya has increased this from the previous 5.8 shillings per litre to 9bob per litre. Quite a heavy burden on car owners and eventually on every user of processed items and any item that requires transportation in its constituent states or final products. The Minister has done away with issue of Road Licence Fee to cushion the car owners.
3.
VAT on services provided by Kenswitch & Pesa PointKimunya has clarified that VAT will be levied on the services (including ATM services) rendered by the above companies. Am not certain whether that was in place before the 2006/7 Budget, but it it wasn't- this will surely see a rise in the cost of atm transactions. I currently pay 40 per withdrawal from my Kenswitch atm... i might just have to store that cash under the pillow, or at NSE!
4.
VAT(Exemption) on Kenyan Entertainment
Kimunya has put a smile on our local artists' faces by providing vat exemption where entertainment is provided
wholly by Kenyan talented people. (If your not talented, you pay VAT... just kidding!) This is intended to promote growth of the local entertainment industry. Kudos there!
5.
VAT Zero rating on Computers & accessories thereto
Following the Govt's commitment to support the ICT sector, Kimunya has taken this further step. I see more Kenyan's carrying laptops on the shoulders! I've seen some mobile phones that have MS Office... i wonder if Kimunya could make those cheaper as well!
6.
Napkins, Feeding Bottles, Wheat.... Zero Rated
Am still not convinced that the move on napkins and feeding bottles will have any serious impact on anyone's life. The guys really in need of help and who use these things go to shop at Toy and Gikosh for their Napkins and Feeding Lining. Well... maybe Bottles, but still- hardly felt. (
Its probably the ignorant bachelor in me speaking!)
On the wheat- and even the rest, i think the fuel increase will undo the good intended by these gifts from Kimunya.
7.
ETR
Kimunya has added provisions making it more difficult for anyone refusing to buy and utilise the ETR from surviving in Kenya's market.
All in all, as i ain't an economist, i shan't purport to make any further criticism to what i think was a fair attempt by Kimunya.