Gov't Imposes Taxes on Employees' Allowances, Airtime

The government is set to introduce taxation on airtime received by Kenyan workers from their
employers beginning August 1st, 2018, in a new Bill published by Treasury Cabinet Secretary Henry Rotich.

The new taxes will also be imposed on allowances offered to employees including house, meals, car and other allowances, reports The Standard.

"If you receive airtime that is above Sh3,000, that will be taxed," a Kenya Revenue Authority (KRA) official told the paper.

Further, the government will also take up 12.7% of every mobile cash transfer transaction, a blow to ordinary Kenyans who are the major users of the service.

The KRA official said the government has marked airtime as one of the key taxable "non-cash benefits" and every allowance that exceeds Sh3,000 mark will be taxed.

The development comes in the wake of increased excise duty on beer, cigarettes, fruit juices, bottled water, and motorcycles.

"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," a memo by PricewaterhouseCoopers to its clients read in part.

The increased and new taxes will not, however, apply to 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 memo stated.