Kenya Budget 2024/2025 Highlights

On 13th June 2924, the Cabinet Secretary for Finance tabled the Kenya Budget for the financial year 2024/2025 in the National Assembly. This budget focuses on economic recovery, sustainable development, and social welfare enhancements. Below are the key highlights and main taxation changes as contained in the Finance Bill, 2024.

 

Economic Overview

• Growth Projections: The economy is projected to grow by 5.8% in 2024, driven by recovery in the agriculture, manufacturing, and service sectors.
• Inflation Control: Measures to keep inflation within the target range of 2.5% – 7.5% through monetary policy interventions.

 

Revenue Measures

• Tax Reforms: Introduction of a more progressive tax regime aimed at enhancing equity and fairness in taxation.
• VAT Adjustments: Standard VAT rate to remain at 16%, with adjustments on specific goods and services to expand the tax base.
• Excise Duty: Increased excise duty on luxury goods, including high-end motor vehicles and alcoholic beverages, to boost revenue collection.

 

Main Taxation Changes

• Income Tax:
  • Introduction of a higher tax band for individuals earning above KShs.1,000,000 per month at 35%.
  • Reduction of corporate tax rate for small and medium enterprises (SMEs) from 30% to 25% to encourage business growth.
• Capital Gains Tax:
  • Increase in the capital gains tax rate from 5% to 10% on the sale of property and marketable securities.
• Digital Services Tax:
  • Enhanced compliance measures and an increase in the rate from 1.5% to 2% to capture more revenue from the digital economy.
• Property Tax:
  • Introduction of a new property tax on high-value properties valued above KShs.50 million at a rate of 1.5% annually.

 

Other Fiscal Measures

• Public Debt Management:
  • Plans to reduce the fiscal deficit to 6% of GDP through prudent debt management and increased revenue mobilization.
• Infrastructure Development:
  • Allocation of KShs.200 billion for infrastructure projects, including roads, bridges, and energy projects to spur economic growth.
• Health and Education:
  • Increased funding for health services by 15% to support the Universal Health Coverage (UHC) initiative.
  • Significant investment in education with a focus on enhancing access and improving the quality of basic and higher education.
• Social Protection:
  • Enhanced social safety nets with an allocation of KShs.30 billion for cash transfer programs targeting vulnerable groups.

 

Conclusion

The 2024/2025 budget aims to foster economic stability, enhance social welfare, and promote sustainable development. The government’s focus on tax reforms, infrastructure development, and social protection is expected to drive the country’s growth and development agenda.

Stay tuned for more detailed analysis and insights on how these changes may impact various sectors and stakeholders.

For more information, visit our website or contact us at:

B M Musau & Co., Advocates LLP

Email: info@bmmusau.com

Website: www.bmmusau.com