Government to Impose Tax on Employees’ Allowance

By Virginia Nyambura

The Government is set to impose a new tax on airtime exceeding 3000 shillings given to employees as allowances this is according to Treasury Cabinet Secretary, Henry Rotich.

The said tax increase will also extend to car and house allowances provided to employees by their Employer.

The New tax will be effective from 1st of August 2018 and will include 12.8 percent tax on each and every mobile transfer transaction as included in the just-released budget.

The employer will pay tax on cars depending on the engine size if the car is listed as the company’s property. Personal vehicles will however not be taxed.

The tax on mobile money transfer transaction is likely to affect every Kenyan including those struggling to make a living. The cost of running a business will definitely also go up making it harder for the investors.

The new taxes have come in times when the Government is grappling with unresolved scandals of lost billions from the NYS and Kenya Power which is likely to create bitterness among the taxpayers.

The change will also include an increased excise duty on fresh juices, bottled water, beer, cigarettes, and motorcycles.

These new changes will start to be effected on the products delivered by manufacturing industries as of 1st August 2018.