Inside Kenya's Finance Act 2021

Kenya's Finance Act 2021 has stirred mixed reactions following the recent amendments to several tax-related acts. The Act, signed into law by Kenyan President Uhuru Kenyatta, introduces various changes that have sparked discussions over the potential impact on businesses and the common man. CNBC Africa's recent interview with Kwame Owino, the CEO of the Institute of Economic Affairs, provided valuable insights into the notable changes brought about by the Finance Act 2021. One of the key points highlighted in the interview was the imposition of new taxes on Liquified Petroleum Gas (LPG) or cooking gas. Effective from July 1st, a 16% Value Added Tax (VAT) will be applied to LPG, a move that could potentially affect consumers and lead to unintended consequences such as a shift to less efficient fuels like kerosene or firewood. Additionally, the Act includes taxation on digital services with an excess tax rate increased from 15% to 20%, impacting service providers in the telecommunications sector. The Act also raises the excess tax on processing fees for loans and financial transactions from 15% to 20%, potentially squeezing consumers and impacting lending activities. Furthermore, the reclassification of certain commodities, including medical equipment, will lead to the imposition of import duties on previously untaxed items. These changes across various tax areas have raised concerns over the potential burden on businesses and individuals, with some critics arguing that the new measures could make it tougher for the common man.