Govt’ Kicks Off New Year With New Tax

Traders across the country will have to dig deeper into their pockets starting January 2020 as the reintroduction of the 3 percent tax on sales take root.

Reports from Business Daily on Wednesday, January 1, indicate that the tax will target traders operating small and mid-sized businesses across the country.

The publication indicated that the measures are a part of the recommendations of the Finance Act 2019, which was signed by President Uhuru Kenyatta into law on November 7, 2019.

The move is also a part of the measures by the Kenya Revenue Authority (KRA) to collect additional revenue in an attempt to meet its targets, which it has largely failed to over the years.

The sales tax will target small and mid-sized businesses whose annual sales are below Ksh5 million, where a majority of Kenyan workers are operating in.

Reports indicate that the micro and small-sized businesses are the largest contributors to the job markets at the moment despite operating in an informal setting.

The Economic Survey of 2019 revealed that the informal sector contributed to a whooping 762,000 jobs of the 840,600 new jobs created in 2018, accounting for 90.67 percent of the jobs created within the period.
The Sales tax, which had been mooted in 2018, had been dropped by the Treasury after most traders failed to make revenue disclosures.

In its place, the presumptive tax was introduced at the rate of 15 percent of the single business permit fee issued by the county governments when renewing business permits.

It is through the presumptive tax that the KRA did their studies on small scale traders and their revenue capacity while setting the stage for the re-introduction of the new levy.