Government to tax employees airtime, allowances beginning August

The government will be taxing airtime given to Kenyan workers starting August 1, 2018. This is according to the new bill published by Treasury Cabinet SecretaryHenry Rotich.

A KRA official told The Standard that the government has identified airtime as one of the key taxable “non-cash benefits”, therefore it will tax every airtime allowance that exceeds 3,000.

“If you receive airtime that is above Sh3,000, that will be taxed,” said the Kenya Revenue Authority (KRA) official. Any other non-cash benefits that exceed 3000 will also be taxed.

Taxes will also be imposed on other allowances offered to employees. This include car, house, meals and other allowances.

The ordinary Kenyan will also be hit by the new taxes, as the government will take up to 12.7% of every mobile cash transfer transaction.

In regard to vehicles, employers with company vehicles will pay taxes depending on value of the car and engine size. However, personal use vehicles will not be taxed.

Cigarettes and motorcycles have also been hit, there excise duty has been increased by 5.2% while water and non-alcoholic drinks get a 4% increase. Fruit juices and alcoholic drinks will also have a 5% increase.

“This change is effective August 1, 2018, and it applies to the above excisable products delivered from manufacturing facilities from that date. In addition, all imports of excisable goods cleared for home use from that date shall attract new excise duty rates,” audit firm PricewaterhouseCoopers said in a note to its clients.

To the relief of Kenyans, the new taxes will not affect petroleum products.

“Petroleum products, which also attract excise duty at specific rates, have not been affected by the adjustment. This could be due to the anticipated increase in price due to the introduction of VAT in September 2018 with the expiry of the transitional VAT exemption,” the note stated.