On 21st June 2022, The President of the Republic of Kenya assented The Finance Act 2022 into law and was published by the Cabinet Secretary, Ministry of National Treasury on Thursday, 23rd June 2022.
This Finance Act has introduced a raft of tax measures to amendment The Income Tax Act, Value Added Tax Act, Excise Duty Act, Tax Procedures Act, Tax Appeal Tribunal Act. This amendment made to various tax laws are intended to assists the government in collection and administration of taxes. From Tax perspective, the amendments of this various provisions of the vividly expressed and demonstrated that the government is very clear on its efforts to seal all the loop holes in our taxes laws in order to collect more revenue by either raising tax rates or widening the scope by bringing in other exempted items under the tax. Additionally, there are also some amendments intended to provide various incentives to certain industries like Manufacturing of locally assembled passanger motor vehicles, manufacture of human vaccine among others. Majority of this raft changes takes effect 1st July, 2022 while others 1st January 2023.
Definitions of Terms
The Finance Act 2022 has defined permanent home as a place where an individual resides or which is available to that individual for residential purposes in Kenya, or where in the opinion of the Commissioner the individual’s personal or economic interests are closest.
This definition has now provided more clarity avoiding ambiguity that existed on the interpretation of tax residence status a taxpayer for purposes of charging tax at a resident rate .For instance individuals who may have their closest personal and economic ties in Kenya can now be deemed tax residents for taxation purposes
The Act has defined financial derivatives to mean a financial instrument the value of which is linked to the value of another instrument underlying the transaction which is to be settled at a future date.
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