7 New Government Taxes & Fees Coming In 2024 

Last year, the financial landscape underwent significant transformations following the implementation of the Finance Act 2023. While some changes took effect immediately, with rollouts beginning in July and September 2023, others are poised to make their impact felt from January 2024 and beyond. 

The changes are not limited to tax legislation alone; there is a signal of forthcoming adjustments in government fees, with the potential for both new fees and increases in existing ones. 

In this context, it becomes imperative for individuals and businesses to stay informed about these impending modifications to navigate the evolving landscape effectively and make plans for 2024 with the expected changes in mind. 

To that effect, this article will break down what you can expect in terms of government fees in 2024 and what it means for everyone involved.

Read Also: 20 Money-related Laws That Were Passed in 2023

Digital Asset Tax

The Finance Act 2023 introduced a Digital Asset Tax. This tax, set at a rate of 3%, is payable by individuals on income derived from the transfer or exchange of digital assets such as cryptocurrencies, token codes, and Non-Fungible Tokens (NFTs). 

This tax will likely affect people who trade in digital assets, individuals who own and transfer these assets, and those who receive payments in digital assets and later convert them to traditional fiat currency. 

The tax deduction will be made at the source from the total value of the exchanged asset regardless of profit or loss. The new law stipulates that exchanges operating in the country will act as tax collectors, withhold the 3% tax whenever their users exchange or transfer any of their assets, and remit the money to KRA. 

2.75% SHIF Deductions

Under the published Social Health Insurance (General) Regulations, 2023, households across the country are set to contribute 2.75% of their monthly gross income to the newly established Social Health Insurance Fund (SHIF).

This initiative, designed to overhaul the existing National Health Insurance Fund (NHIF), was temporarily halted by a conservatory order pending a constitutional challenge. The injunction is slated to remain in effect until February 7, 2024.

For employed individuals, the monthly statutory deduction contribution to the SHIF will be made from their salary automatically (like NHIF does). The amount payable each month will not be less than Ksh300. 

However, for those who are not formally employed, the amount is paid annually. Effectively, this means unemployed or unsalaried individuals will be required to make an annual payment of at least Ksh3,600 to the SHIF.

If the injunction is lifted, high-income earners will face a significant increase in their contribution, which was previously capped at Ksh1,700 by NHIF. Some low-income households previously paying NHIF minimum Ksh500 contribution might experience some relief. 

Applying For a New ID Card Will Cost Ksh300

The government, through the State Department of Immigration and Citizen Services, revised the charges for some of its services, including passport, ID, birth, and death certificate applications.

In a special gazette notice dated November 14, 2023, Interior Cabinet Secretary (CS) Kithure Kindiki announced that first-time ID applicants will pay Ksh300 to acquire the document that was formerly issued at no cost. Replacing lost IDs will cost Ksh1,000, up from the current Ksh100.

The November 15 gazette notice revoked another gazette notice that had been issued on November 7 - pushing the cost of replacing a new ID to Ksh2,000 and Ksh1,000 and Ksh1,000 for first-time applications. 

The CS also announced that the standard 34-page passport application fee will cost Ksh7,500, up from the current Ksh4,500.

A 50-page ordinary passport will now cost applicants Ksh9,500 from the existing Ksh6,000, while the application fee for a 66-page ordinary passport has shot up from Ksh7,500 to Ksh12,500. Replacement of a lost passport or a valid mutilated passport will cost Ksh20,000, up from Ksh10,000 and Ksh12,000, respectively. 

Birth and death certificates, which are currently issued at Ksh50, will cost Ksh200.

The new intended charges, fees, and levies for the affected services are to take effect on January 1, 2024.

Up to 3,900% More For NTSA Services if New Proposal Goes Through 

The National Transport and Safety Authority (NTSA) is proposing a drastic increase in the cost of 45 services it offers—including a 3,900 percent increase on what one would pay for the approval of a change of colour of a motor vehicle from Ksh500 currently to Ksh20,000. 

The transport sector regulator said it has consistently faced financial challenges, reporting a cumulative deficit of Ksh2.37 billion as of June 30, 2023. This proposed adjustment aims to address the financial gap and ensure the sustainability of the regulator's operations. 

If the proposal takes effect, here are some of the costs car owners and buyers will face: 

Source

Locum Payments Will Be Subject to PAYE

Effective January 2024, taxation of locum payments, which currently incur a 5 percent withholding tax, will shift to the Pay As You Earn (PAYE) system. This transition will affect Kenyan doctors who engage in temporary assignments, and particularly those in specialized fields, and provide their services across multiple hospitals. 

The PAYE system may potentially impact their tax bands, leading to an adjustment in the calculation of their tax liabilities. As the collection is based on income brackets, some locum professionals might be subject to higher tax rates under PAYE. 

Under the current system, doctors would pay a 5 percent withholding tax on their locum payments, and any additional tax obligations were addressed when filing annual returns. The impending shift to PAYE introduces a more immediate and comprehensive approach to tax collection where doctors will settle all tax obligations monthly. 

Read Also: Tackling Post-Holiday Debt: A Step-by-Step Guide to Financial Recovery

Taxation on Employee Shares

The Finance Act 2023 introduces deferred taxation for shares allocated to employees by eligible start-ups. The provision will become effective at the start of 2024. The tax benefit is scheduled to be imposed within 30 days of the earliest occurrence of three events: 

• The passage of five years from the year in which the shares were awarded, 
• The disposal of the shares by the employee, or 
• The date the employee ceases to be an employee of the eligible start-up. 

The taxable value of the shares is determined based on the fair market value. In instances where the fair market value is not readily available, KRA will determine the value of the shares based on the last financial statements issued by the start-up. 

This provision does not extend to cash emoluments or other benefits-in-kind provided to employees as part of their employment, only shares issued by eligible start-ups. 

Increased Advance Tax for Commercial and Passenger Motor Vehicles

The Finance Act increased the advance tax payable on passenger and commercial vehicles, and the change is slated to take effect on 1 January 2024.

The advance tax for Commercial vehicles (such as vans, pickups, trucks, prime movers, trailers, and lorries excluding tractors or trailers used for agricultural purposes) will be revised from the higher of Ksh1,500 per tonne of load capacity per year or Ksh2,400 per year to the higher of Ksh2,500 per tonne of load capacity per year or Ksh5,000 per year, whichever is higher. 

The advance tax for saloons, station wagons, minibusses, buses, and coaches will be revised from the higher of Ksh60 per passenger capacity per month or Ksh2,400 per year to the higher of Ksh100 per passenger capacity per month or Ksh5,000 per year, whichever is higher. 

Read Also: All The Taxes You Pay In A Day If You Earn Ksh80k

WRAPPING UP

Will the new government fees/taxes affect your paycheck or increase your spending on government services?  

If yes, proactive preparation is the key to navigating these upcoming fees and new taxes without letting them disrupt your financial goals or impact your paycheck. Whether it's adjusting your spending habits or exploring potential tax-saving avenues, the earlier you realign your finances, the better. Here's to a financially savvy and resilient new year!