Kenyan Govt to Implement Produce Withholding Tax for sales
The National Treasury, a branch of the government, has disclosed that it plans to impose taxes on agricultural goods that farmers sell through different cooperatives.
The Treasury’s Draft 2024 Budget Policy Statement disclosed that this action would assist in generating additional money for the government to support and maintain the Bottom Up Economic Transformation Agenda.
The agricultural sector was labelled as Hard to Tax Sector with the Treasury promising to develop a framework to raise revenue from the area.
“(The Treasury will) Review and explore means on suitable taxation of the agriculture sector, such as introducing withholding tax on payments for produce delivered to cooperatives or other organized groups,” the Policy Statement indicated how farmers would be affected in the 2024/2025 Financial Year Budget.
Withholding tax is a technique of tax collection whereby a payer of some earnings deducts tax upon payments of certain incomes to payees, according to the Kenya Revenue Authority.
After the deduction is made, the payer has five working days to remit the tax that was taken out to the Commissioner of Domestic Taxes Department.
The Njuguna Ndung’u-led ministry assured Kenyans that a threshold would be put in place to cushion low-income earners.
Other hard-to-tax sectors include informal and digital sectors.
To ensure that the Kenya Kwanza administration raised revenue from those sectors, the policy statement has proposed a review and exploration of means of suitable taxation of the informal sector as well as the digital sector.
Other ways the Treasury will seek to raise revenue is by introducing a carbon tax and granting green fiscal incentives.
The administration of President William Ruto will also implement a motor vehicle circulation tax.
Owners of motor vehicles will be required to pay this annually, with some categories of cars exempt.
Kenyan Govt to Implement Produce Withholding Tax for sales
