Confusion as New Law Allowing Govt to Collect Rates on Freehold Land Takes Effect

In Summary:

• Kenya Airways' share price doubled within days of resuming trade on the NSE, supported by a government rescue plan and improved profitability.
• The Kenya Revenue Authority (KRA) has set January 20 as the deadline for advance tax payment on commercial vehicles, with penalties for non-compliance.
• Kenya's Immigration Department faces criticism for its restricted tender for foreign visitors' medical insurance, with insurers and the PPRA urging a more open and inclusive process.
• Starting February 1, a new 4% levy on sugar will increase prices, funding Kenya Sugar Board operations and infrastructure.
• Nearly half of Kenya's real estate firms operate unregulated, fueling fraud and investor losses, despite the sector's GDP contribution of Ksh1.26 trillion.
• Kenya's money supply halved in 2024 as private sector credit growth fell to 4%, driven by reduced lending and exchange rate impacts, despite late-year shilling stabilization.
• A new land rates law has created confusion over its application, with freehold and leasehold property owners uncertain about tax obligations based on land use and location.

Kenya Airways' (KQ) share price doubled within eight days of resuming trading on the Nairobi Securities Exchange (NSE), closing at Ksh1.60 after a prolonged suspension since 2020. The Capital Markets Authority (CMA) declined to extend the trading freeze further, citing improved investor conditions and KQ's return to profitability in H1 2024, with a net profit of Ksh1 billion. The Business Daily reported that the airline benefited from a government rescue plan, converting its foreign currency debt into a shilling-denominated facility, easing financing costs, and mitigating exchange rate risks.

The Kenya Revenue Authority (KRA) has set January 20, 2025, as the deadline for paying advance tax for commercial vehicles. Tax rates depend on vehicle type, with vans, pick-ups, and lorries taxed at Sh2,500 per ton of load capacity (minimum Sh5,000 annually) and passenger vehicles charged Sh100 per passenger capacity per month (minimum Sh5,000 annually). Advance tax must also be cleared before vehicle ownership transfers. According to Capital Business non-compliance may lead to penalties, with KRA urging taxpayers to adhere to the rules as required under the Income Tax Act.

In a report by the Business Daily, Kenya's Immigration Department faces scrutiny over its restricted tender for compulsory medical insurance for foreign visitors, with insurers and the Public Procurement Regulatory Authority (PPRA) questioning the process. The tender, tied to the Social Health Insurance Act 2024, has been criticized for potentially locking out local underwriters and violating procurement regulations. The Association of Kenya Insurers (AKI) has called for an open tendering process, arguing that the restrictive method unfairly favors select firms and third-party administrators. PPRA has urged the department to address these concerns before proceeding.

Starting February 1, sugar prices in Kenya are expected to increase following the implementation of a 4% Sugar Development Levy (SDL) on both domestic and imported sugar. The levy, introduced under the Sugar Development Levy Order, 2025, will fund operations of the Kenya Sugar Board (KSB), research, infrastructure, and support for sugarcane farmers. This comes alongside recent excise duty hikes, adding pressure on consumers despite a 25% drop in sugar prices last year as reported by Nation.

In another report by the Business Daily, nearly half of Kenya's real estate firms operate without regulatory oversight, a KNBS report reveals, citing lack of interest and perceived ineligibility as key reasons for non-registration. This unregulated environment has fueled rising consumer complaints, with some firms collapsing after collecting millions from investors. While the sector contributed 8.9% to GDP in 2023, growing to Ksh1.26 trillion, it remains marred by fraud, high loan defaults, and inadequate consumer protection, prompting calls for stricter regulation.

Kenya's money supply (M3) dropped by half in 2024, with credit growth to the private sector falling to 4%, equivalent to Ksh3.8 trillion, according to CBK data. According to The Star this marks the third consecutive year of declining credit growth, attributed to reduced lending to key sectors like manufacturing, trade, and construction. Foreign currency loans, impacted by exchange rate valuation effects, further contributed to the slowdown. Despite challenges, some sectors, such as business services, saw modest credit growth. Kenya's shilling stabilized late in 2024 after Eurobond repayment and support from global lenders. 

A new land rates law in Kenya has sparked confusion over its application to freehold and leasehold properties. Under the law, property owners with leasehold titles will continue paying land rates, while those with freehold properties may be exempt, depending on specific land use and location criteria. According to the Business Daily, the legislation seeks to streamline land taxation but has raised concerns about its impact on landowners and the potential for disputes over its interpretation and implementation.