The Kenyan Government has disclosed its plans to impose a withholding tax on agricultural products sold by farmers through different cooperatives.
According to the Kenya Revenue Authority, withholding tax is a way of tax amassment whereby an employer deducts tax from an employee’s payment and then remits it to the Commissioner of Domestic Taxes Department within 5 working days.
According to the Draft 2024 Budget Policy Statement drawn up by the Treasury, the essence of this move is to help the government generate revenue to finance and sustain the Bottom Up Economic Transformation Agenda.
Kenya To Impose Withholding Tax: More Perspective
Just like the informal and digital sectors, the agricultural sector was tagged as a hard-to-tax sector, with the Treasury promising to design a framework to help generate revenue from the area.
The Treasury will come up with a great way to tax the agricultural sector, such as the imposition of withholding tax on payments for agricultural products sold to cooperatives or other organized groups.
The Treasury promised Kenyans that the government would put a threshold in place to mitigate the effects on low-income earners.
As part of efforts to ensure that the Kenya Kwanza administration generates revenue from the hard-to-tax sectors, the Statement has suggested an analysis and survey of means of suitable taxation of both the informal sector and the digital sector.
Another means by which the Treasury will seek to generate revenue is by initiating a carbon tax and granting green fiscal incentives. There will also be a motor vehicle circulation tax which will be remitted yearly by owners of certain motor ve