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Kenya Kwanza government has officially released the Finance Bill for the fiscal year 2024/2025, introducing a new Motor Vehicle Tax while leaving alcohol tax unchanged.
Under the proposed bill, a Motor Vehicle Tax of 2.5% of a vehicle’s value will be levied, and it will be payable at the time of insurance issuance.
The aim of this tax is to generate revenue for the government and contribute to the development of the country’s infrastructure and public services.
According to the bill, every vehicle owner will be required to pay a minimum amount of Sh5,000, with a maximum limit of Sh100,000, depending on the details of the vehicle.
This measure is expected to ensure that vehicle owners contribute their fair share to the tax system.
To enforce compliance, insurers will be responsible for collecting and remitting the Motor Vehicle Tax. Failure to do so will result in a penalty of 50% of the uncollected amount, in addition to the outstanding tax itself. This provision aims to ensure that insurers actively participate in the tax collection process.
Interestingly, the Finance Bill has once again left the alcohol tax unchanged. Despite previous discussions and expectations of a potential increase, the bill released this time does not include any adjustments to the liquor tax.
The decision may come as a relief to alcohol producers and consumers who have experienced consistent tax hikes in 11 years.
The Finance Bill 2024/2025 reflects the government’s efforts to generate revenue and maintain a balanced fiscal policy. It remains to be seen how these proposed tax measures will impact vehicle owners, insurers, and the overall economy of Kenya.
