FINANCE BILL 2024: 10 Products Exempted from Tax

FINANCE BILL 2024: 10 Products Exempted from Tax

The Finance Bill 2024 proposes tax exemptions for crucial products and services as a means of lowering the cost of living. 

If enacted by parliament, the measures will serve as the foundation for President William Ruto’s administration’s tax strategy, which intends to generate income to cover the 2024/25 fiscal year budget. 

It should be noted that several of the products that are now exempt were zero-rated in the 2023 Finance Act and have since been classified as exempt. 

Zero-rated meant that while the retail goods cannot be taxed, suppliers can still claim value-added tax (VAT) paid on inputs, whereas exemption means there are no taxes but also no claim for the VAT on inputs.

Goods and services that were zero-rated but are now exempted include the supply of motorbikes under tariff number 8711.60.00 and the delivery of regular bread. 

Furthermore, milk and cream that are not condensed and do not include added sugar or other sweeteners have been shifted from zero to exempt status. 

“All inputs and raw materials whether produced locally or imported, supplied to manufacturers of agricultural pest control products upon recommendation by the Cabinet Secretary for the time being responsible for agriculture,” the Finance Bill further stated on the proposal to move products from zero-rated to exempt. 

This category includes agricultural pest treatment, the delivery of maize (corn) flour, cassava flour, wheat or meslin flour, and maize flour containing more than 10% cassava flour, as well as inbound international maritime freight offered by a registered person. 

While switching from zero-rated to exempt status does not always result in price reductions, the Kenya Kwanza has recommended more exemptions for previously taxed commodities. 

These include micronutrient foliar feeds and biostimulants, tea packaging material, and insect repellents. 

It should be noted that the supply of denatured ethanol, plain polythene film, and pressure-sensitive adhesive will no longer be tax-free. 

Services imported or produced locally for use by local film producers or agents, as recommended by the Kenya Film Commission and subject to approval by the Cabinet Secretary for the National Treasury, would no longer be exempt.

FINANCE BILL 2024: 10 Products Exempted from Tax