Following the reading of the Budget Statement for the financial year 2018/19 by the Cabinet Secretary for the National Treasury, The Finance Bill, 2018 (“the Bill”) has gone through Parliamentary vetting and is currently awaiting the President’s Assent. Under the Provisional Collection of Taxes and Duties Act, the provisions of the Bill will come into force on different dates between 1 July 2018 and 1 January 2019.
We have carried out an in depth analysis of the Bill and have noted the following:
a. The President’s Big Four Agenda (Food Security, Affordable Housing, Manufacturing, Universal Healthcare) is alive and kicking and this is highlighted in different sections of the Bill. For example, 130% of the electricity expenses incurred by the manufacturers will now be deducted from their taxable income. In addition, plant and machinery used for the manufacture of goods, parts imported or purchased locally for the assembly of computers, goods used in construction and equipping of hospitals with more than 50 bed capacity will be exempt from excise duty;
b. Stiffer penalties have been imposed to discourage non-compliance and in some instances to discourage production of counterfeit goods;
c. The Government’s appetite to expand its tax base has increased. The Bill introduces the presumptive tax which will target small business owners and informal businesses. It also increases taxes on money transfers made through the bank and mobile money transfers; and
d. The Sports, Arts and Social Development Fund has received a major boost since all the tax collected from the taxes charged on money transfers and from betting, lotteries and gaming activities will be remitted to this fund
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