The Tax Laws (Amendment) Act No. 9 of 2018 gazetted on 25th July 2018
On 18 July 2018, Kenya’s President assented to the Tax Laws (Amendment) Act, 2018. Provisions regarding the Income Tax Act (ITA) (Cap 470) and Value Added Tax Act (VAT Act) (Cap 476) became effective retroactively on 1 July 2018.
Amendments to the VAT Act focus on the exemption of various supplies which were previously zero rated or standard rated. Exempt supplies are not subject to tax whereas zero-rated and standard-rated supplies are taxable at a rate of 0% and 16% respectively.
The amendments to the ITA increase the tax incentive on persons who are saving in registered Home Ownership Savings Plans (HOSP) towards home ownership while exempting the purchase of a house by a first time home owner from stamp duty. To encourage home ownership, it introduces affordable housing relief for individuals who have made an application under an affordable housing scheme. It also redefine “winnings” and reintroduce a withholding tax of 20% on winnings.
A new section, Affordable Housing Relief, was inserted, identifying the resident individual who will be entitled to a personal relief.
The amount of the affordable housing relief will be 15% of the individual’s gross employment income, to a maximum of Ksh. 108,000 per annum.
The amendments also permits a deduction against taxable income for deposits into registered HOSP by individuals who are not already home owners. The deduction has been increased from Ksh 48,000 per annum (Ksh 4,000 per month) to Ksh 96,000 per annum (Ksh 8,000 per month).
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