“We contend that for a nation to try and to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle” ~ Winston Churchill
Income Tax (PAYE, NSSF, NHIF)
• Salaried employees with no other sources of income
and whose employer deducts PAYE tax are no longer
required to file personal tax returns.
• Employees will be eligible for personal relief from only
one employer in cases where they have more than one
• The Commissioner granted express powers to
register taxpayers who do not to apply for Personal
Identification Number (PIN).
• Medical services or medical insurance paid by
an employer on behalf of full time employee’s
beneficiaries is now clarified as a non-taxable benefit.
• Real Estate Investment Trusts (REITs) exempt from
corporation tax and dividends paid by REITs are exempt
from withholding tax.
• Kenya Government allows organizations to enter into
Tax Information Exchange Agreements with other
countries for Transfer Pricing purposes.
• Withholding tax on management, professional or
training fee increased to 10% from 5%.
• Winnings from betting and gaming activities will attract
20% withholding tax.
• The Commissioner will prescribe how to calculate
deemed interest and this deemed interest will be
subject to withholding tax.
• Leasing of locomotives or rolling stock from nonresidents
now exempt from
Returns, records or documents required for tax
purposes shall be prepared in Kenya Shilling and
maintained in English or Kiswahili.
• Direct contributions by members of Association of
Kenya Insurers (AKI) in respect of Integrated Motor
Insurance Data Base System project exempted from
income tax until February 2012.
• Draft VAT Legislation Bill is ready and will be made
available to the public for their comments. No time
lines have been provided for the inacting of the new
• Remission of import duty on aseptic plastic bags for
storing fruit extracts to 10% from 25%.
• Import duty on premixes used in the manufacture of
animal feeds has been zero rated.
• Reduction of import duty to 10% on heads used in
manufacture of sprays.
• Increase of duty on galvanized wire to 10% from 0%.
• Duty remission on inputs for production of solar panels.
• Exemption of import duty on battery operated vehicles.
• Exemption of import duty on apron buses essentially
used in airports.
• Exemption of import duty on tsetse fly traps.
• Exemption of import duty on machinery, equipment
and motor vehicles for official use by the Kenya Police.
• Exemption of duty on security equipment including
CCTVs, handheld metal detectors, bomb detectors,
walkway screening detectors and under carriage mirrors.
• Importation of rice at 35% instead of 75% for a period
of one year.
• Remission of import duty on wheat grain at 0% instead
of 10% granted last year, for a period of one year for
• Remission of import duty on maize grain at 0% instead
of 50% for a period of six months for gazetted millers.
• Reduction of import duty on food supplements from
25% to 10%.
• Zero rating of import duty on motor cycle ambulances.
• Removal of excise duty on kerosene.
• Harmonization of the excise duty regime on cigarettes
at Ksh.1200 per mille or 35% of the retail selling price,
whichever is higher.
• Harmonization of excise duty regime on beer at Ksh. 70 per
litre or 40% of the retail selling price, whichever is higher.
• Excise duty on wine increased to Ksh 80 per litre or
40%, whichever is higher.
• Excise duty on Ready To Drink (RTD) beverages of
strength not exceeding 10% by volume of alcohol shall
be Ksh 70% or 40% of the retail selling price.
• The Fourth Schedule of the Customs and Excise
Regulations amended under the Provisional Collection
of Taxes and Duties Act to include a new list of
conditions to be satisfied by denaturants.
• Ksh.221.4 billion for physical infrastructure – most of
these resources have been allocated towards road,
energy and transport development.
• Ksh.100.9 billion has been allocated to the Ministry of
Roads to fast track implementation of critical roads to
allow Kenyans early opportunity to use them.
• Ksh.65.7 billion has been allocated to Ministry of
• Of this above amount, geothermal development will
receive Ksh.16.1 billion, which will be used to drill and
assess the viability of producing 140 MW.
• The Rural Electrification Programme will benefit from
Ksh.5.6 billion to facilitate supply of power from
national grid to 460 trading centres and 110 secondary
schools, among other public facilities country wide.
• Ksh.3.3 billion as mobilization fund to initiate
the implementation of a new Standard Gauge Railway
(SGR) connecting Mombasa to Kampala with a branch
line to Kisumu.
• An additional Ksh.1.9 billion toward construction of
a new branch line from Embakasi Railway Station to
Jomo Kenyatta International Airport (JKIA).
• Ksh.1 billion to initiate upgrade for the Nairobi – Ruiru
via Makadara, Dandora, Githurai and Kahawa railway
line to expand passenger services by at least ten fold.
• Ksh.64 billion for health services delivery plan and
restructure of the health delivery system by shifting
emphasis from curative to preventive health care.
• Ksh.903 million will be earmarked for purchase of
• Ksh.150 million for purchase of modern equipment
for screening cervical and breast cancer.
• Ksh.534 million allocated toward finalization of
rehabilitation of health facilities initiated under
the economic stimulus programme.
• Ksh.6.6 billion will be channelled toward enhanced
immunization coverage throughout the country.
• Continue to support expansion of voluntary health
insurance services in order to ensure more Kenyans
access health services.
• Ksh.8.25 billion towards the provision of free primary
• Ksh.18.5 billion for free day secondary education
• Ksh.1.67 billion for free school feeding programme,
mainly in ASAL areas.
• Ksh.387.7 million for early childhood development.
• Additional Ksh.750 million for further upgrading of
• Ksh.680 million for purchase of computers for schools
to enhance access to quality learning materials.
• Ksh.780 million to improve infrastructure in schools
with Ksh.380 million going to construction of low cost
boarding schools in ASAL areas.
• Ksh.53.2 billion allocated to tertiary education to
further enhance access to higher education for our
• Additional Ksh.840 million under the Ministry of
Education to scale up the bursary program for orphans
and children from poor households in secondary schools.
• Ksh.300 million under the Ministry of Education to
provide sanitary towels to all needy primary school
Implementation of the New Constitution
• Ksh.20.8 billion towards the implementation of
the new constitution, which include setting up
constitutional offices; drafting of new laws; judicial
reforms, expansion of Parliament facilities, and
preparation for the next elections.
• Ksh.1.5 billion for salaries for constitutional office
• Ksh.9.3 billion for judiciary to prioritize
the implementation of the Constitution and continue
to implement strategies that will lead to reduced case
backlog, improved access to justices and modernize
the court system.
• Ksh.8.1 billion to cater for additional physical facilities
and infrastructure, including embracing ICT to fully
realize live Court hearing broadcasts, and modernization
of the existing facilities in National Assembly.
• The IIEC budget has been enhanced to Ksh.12.1 billion
to ensure smooth preparatory activities.
• Ksh.2 billion to cater for emerging requirements for
• Police numbers are also expected to increase with
the recent recruitment of 7,000 new officers.
• Enhanced funding for operations and maintenance by
Ksh.3.5 billion in order to improve police operations
and fight crime more swiftly.
• Security apparatus such as CCTV cameras, metal
detectors are excempted from import duty.
• Reforms in the financial sector are aimed at increasing
access to financial services, greater efficiency and
improving the overall stability of the financial system.
• Continued licensing of microfinance institutions;
encouraging the Agency banking model; and reviewing
the legal, regulatory and supervisory frameworks for
the financial sector to improve them further and ensure
conformity to the new Constitution and to support
drive towards greater access to credit.
• Kenya Deposit Insurance Corporation Bill and the
National Payments System Bill shall be published shortly.
• Improving the interbank markets; increasing disclosures
of information on bank ratings, performance and
productivity; and aligning pricing of Government Bonds
to reference rates used by banks.
• Encouraging banks to share infrastructure to gain
economies of scale; and to reduce overheads through
increased use of ICT, Agency and mobile banking.
• Extending credit referencing to sharing of positive
information by banks to encourage competition for
• Plan to introduce reforms to improve the legal, regulatory
and administrative processes relating to collateral.
• Pension scheme fund managers no longer restricted to
investing in guaranteed funds.
• Introduction of over the counter trading for bonds and
regulated commodities future market.
• Insurance Regulatory Authority to assume control of
a financially troubled insurer.
• Life insurance contract pricing to use Kenya mortality
Youth Employment and Engagement
• Ksh.1.6 billion for Kenya Youth Empowerment Project
(KYEP) to go towards labour-intensive works and social
• Enhance the Youth Enterprise Development Fund and
the Women Enterprise Fund by Ksh.385 million and
Ksh.440 million respectively.
• Ksh. 210 million (Ksh.1 million per constituency)
towards competitive sports for youth countrywide.
Minister urges the private companies under their
Corporate Social Responsibility (CSR) budgets to match
this amount, at least on a shilling for shilling basis.
• Tax breaks for farms offering internships and training
Agricultural & Rural Development
• Ksh.6.4 million under the Ministry of Agriculture for
provision of water in 170 constituencies.
• Ksh.1.1 billion, which translates to Ksh.30 million
per constituency for 20 water pans of 100,000 cubic
metres in all the 35 needy constituencies.
• Ksh.400 million for establishing Livestock Fund and
providing Ksh.492 million for on-going and additional
slaughter houses in ASAL areas.
• Ksh.475 million as a conditional grant under
the Ministry of Education for 1,900 schools
countrywide or Ksh.250,000 per school for 10 primary
schools per constituency covering 190 rural based
constituencies to expand access to clean drinking water
thereby improving the health of our children.
• KSh 7.3 billion for irrigation programmes covering
various parts of the country.
• KSh 2.3 billion for basic services – water/irrigation,
health, solar power, slaughterhouses – in marginalized
• Additional KSh 3.7 billion (KSh 17.8 million per
constituency) for CDF for completion of existing
• KSh 2 billion capital grants to cooperative societies to
pay coffee debts.
• KSh 4.2 billion for resettlement of IDPs (all categories).
Agriculture :For Food Security and Employment
• The International Fund for Agricultural Development
(IFAD) has extended a generous support of USD.10
million as a Risk Sharing Facility to leverage commercial
banks to lend about Ksh.10 billion to rural and
agriculture development targeting 700,000households.
• Establishing a Ksh.5 billion Impact Investment
Fund under the Kenya Incentive Based Risk Sharing
Agricultural Lending (KIRSAL) to be implemented over
a four year period in order to leverage Ksh.50 billion
lending to agricultural sector and rural development
targeting another 1.5 million smallholder farmers and
over 10,000 agribusinesses throughout the country.
• Ksh.1 billion as an initial Government contribution to
• KSh 2.1 billion to boost the current safety nets to
cushion the vulnerable (disabled persons, orphans,
older persons, and urban poor).
• KSh 3.3 billion (first phase) to enhance pension for retired
teachers and cushion them from rising cost of living.
• Sim card registration before activation.
East African Community
• Continue to position Kenya through appropriate
economic policy and reforms to reap the benefits from
regional integration with opportunities accorded by
EAC Common Market Protocol and the wider COMESA
• Implementation of the provisions of the Common
Market Protocol and support of the ongoing
negotiations of the East African Monetary Union
Protocol to ensure that the exercise comes to a logical
conclusion for the benefit of the East African people.
(Compiled by Nikhil Hira, firstname.lastname@example.org)