Kenya Finance Bill, 2024

Part II – Income Tax Amendments

Advance Pricing Agreements (APA)

The Commissioner may now enter into an **Advance Pricing Agreement** with a taxpayer. This helps multinational businesses pre-determine pricing for international transactions, offering up to five years of tax certainty and reducing disputes.

Pension and Retirement Funds

The bill shifts the registration authority for pension, provident, and individual retirement funds from the Commissioner to the **Retirement Benefits Authority**, standardizing oversight.

Expanded Deductions

The bill introduces several new allowable deductions. Contributions to the **Social Health Insurance Fund**, the **Affordable Housing Act**, and post-retirement medical funds (up to KSh 10,000 per month) are now deductible.

Digital Tax Provisions

Significant Economic Presence Tax (SEP)

A new **Significant Economic Presence Tax** is introduced for non-resident persons with a business on a digital marketplace. The taxable profit is deemed to be **20% of the gross turnover**, expanding the tax net for these services. This replaces the previous Digital Service Tax (DST) framework with a new methodology and rate.

Digital Content Monetization

The definition of “digital content monetisation” has been broadened to include creative works, sharing of material, and licensing of content, among other things, ensuring a wider range of online activities are now subject to tax.

Motor Vehicle Tax

New Annual Tax on Motor Vehicles

A new annual tax is to be paid on each motor vehicle at the time of issuing an insurance cover. The tax is based on the vehicle’s value, with a minimum and maximum limit.

Tax Range: –