Kenya: 2009 Ernst and Young Budget Review

Tuesday, 16 June 2009

Page 1 of 7 A short overview over the key elements of the 2009/2010 budget by Ernst & Young. 2009 BUDGET HIGHLIGHTS ON KENYA Economic Performance The growth of the economy recorded a real growth rate of 1.7% compared to a growth rate of 7.1% in 2007. Emphasis on agriculture, health, transport and energy to enhance growth. Personal Taxation No change in tax rates or brackets, top personal tax rate remains at 30%. The first KES150,000 per month for persons with disabilities exempt from taxation. Expenditure on amenities by the physically disabled tax allowable up to a maximum of KES50,000 per month. Periodic and lumpsum pension withdrawals tax exempted amounts increased. PAYE returns to be filed on a quarterly basis. Corporate Tax Corporate tax rates not changed. The rates remain at 30% and 37.5% for residents and non-residents respectively. Capital allowances increased in respect of expenditure on: hostel and educational buildings, rental residential buildings and telecommunication equipment. Capital allowances introduced in respect of expenditure on: commercial buildings, concessionary arrangements, training buildings, rights for use of fibre optic cable, filming equipment and computer software. Investment in satellite towns off Nairobi , Mombasa and Kisumu granted increased capital allowance to 150%. Minimum qualifying cost for investment deduction on machinery and buildings pegged at KES200 million. Tax losses available for offset for five years. Customs and Excise Duty 5% tax on gambling abolished. Excise duty on non alcoholic beverages and cosmetics reduced. Excise regime for alcoholic beverages changed. Excise duty on jewellery abolished. Value Added Tax Period of lodging VAT claim on inventory following VAT registration extended from 30 days to six months. Withholding VAT agents under obligation to issue withholding VAT certificate at the point of payment. VAT exemption on cellular and wireless network telephones. MISCELLANEOUS AMENDMENTS  Insurance Act Individual ownership restricted to 25% of the listed shares or voting rights of an insurer. Executive appointment restricted to persons holding less than 20% of listed shares or voting rights of an insurer. Coffee Act Rules for licenses to be issued under the act. Separate licenses will be required for one to process or market coffee. Micro Finance Act Exchange of information on non-performing loans between the Deposit Protection Fund Board and micro finance institutions allowed. Traffic Act Commercial vehicles imported for home use to be registered within thirty days of release by the customs. The Foreign Investment Protection Act Provision for the publication of agreements made with the governments of other countries. Persons with Disabilities Act The minister to be empowered to prescribe procedures for granting exemptions from Income Tax Act to persons with disabilities. Sugar Act A levy imposed on locally produced sugar and on the landed entry point price for imported sugar (other than industrial sugar imported by gazetted manufacturers under the duty remission scheme). Retirement Benefit Schemes Deadline for payment of the retirement benefit levy increased from four months to six months after year end. Minimum funding level of an occupational retirement benefits scheme increased from 80% to 100%. Fund managers registered under the CMA may automatically qualify for registration under the RBA Regulations subject to an agreement between the CMA and the RBA. Retirement Benefits (Mortgage Regulations), 2009 to govern the assignment of pension contributions as security for mortgage introduced. Capital Markets (CMA) Act Minimum paid up share capital for stock brokers and investment banks increased. Stock brokers and investment banks to obtain professional indemnity insurance. New listings fees reduced from 0.3% to 0.15% of the issued capital. Central Bank of Kenya Regulations and Compliance Activities and regulations on institutions now extended to cover the institution's duly approved agencies. For the purpose of restrictions on trading and investments, restricted activities expanded to include those undertaken outside Kenya . Central Bank may now disclose information to fiscal or tax agency and fraud investigations agency for the proper discharge of their functions. The institutions are now allowed to share information with institutions outside Kenya in cases where there is a reciprocal arrangement. Central Bank of Kenya Act (Cap. 491) A general penalty for non compliance introduced as a fine not exceeding KES500,000, or to imprisonment for a term not exceeding three years, or to both. Kenya Post Office Savings Bank Act (Cap. 493B) The Kenya Post Office Savings Bank mandate now expanded to include dealing in foreign exchange.   << Start < Prev 1 2 3 4 5 6 7 Next > End >>