The Kenya Finance Bill 2023 is a proposed legislation that aims to implement the fiscal measures announced by the Cabinet Secretary for the National Treasury and Planning in the Budget Statement for the financial year 2023/2024. The bill covers various aspects of taxation, public finance management, and financial sector regulation. Here are some of the key highlights of the bill:

  • The bill introduces a digital service tax (DST) of 1.5% on the gross transaction value of services provided through a digital marketplace in Kenya. The DST will apply to both resident and non-resident digital service providers, and will be payable monthly by the 20th day of the following month. The bill also provides for the appointment of agents to collect and remit the DST on behalf of non-resident digital service providers.

  • The bill proposes to amend the Income Tax Act to expand the definition of permanent establishment (PE) to include any place where a person has a significant economic presence in Kenya. The bill also provides for the determination of a person’s significant economic presence based on factors such as revenue, users, and contracts. The bill further empowers the Commissioner to issue guidelines on how to determine a person’s significant economic presence in Kenya.

  • The bill seeks to amend the Value Added Tax (VAT) Act to exempt certain supplies from VAT, such as medical equipment and devices, agricultural pest control products, and liquefied petroleum gas. The bill also proposes to zero-rate certain supplies for VAT purposes, such as vaccines and syringes, raw materials for animal feeds, and sanitary towels. The bill also introduces a reverse charge mechanism for imported services, whereby the recipient of the service will account for VAT on behalf of the supplier.

  • The bill proposes to amend the Excise Duty Act to increase the excise duty rates on certain products, such as cigarettes, alcoholic beverages, motor vehicles, and plastic bags. The bill also introduces a new excise duty on betting activities at the rate of 20% of the amount wagered or staked. The bill also provides for the adjustment of specific excise duty rates every year based on inflation.

  • The bill seeks to amend the Public Finance Management Act to enhance transparency and accountability in public finance management. The bill requires the National Treasury to publish quarterly reports on budget execution and performance, as well as annual reports on public debt management. The bill also requires county governments to publish quarterly reports on county budget implementation and annual reports on county debt management.

  • The bill proposes to amend the Banking Act to strengthen the regulatory framework for the banking sector. The bill empowers the Central Bank of Kenya (CBK) to issue prudential guidelines on capital adequacy, liquidity, corporate governance, risk management, and consumer protection. The bill also requires banks to disclose information on their financial performance, risk profile, and social and environmental impact. The bill also enhances the CBK’s supervisory powers over banks and their affiliates.