Greetings and welcome to the ninth Money Weekly Roundup of 2024! 

This week, the Law Society of Kenya (LSK) announced that it will begin contempt of court proceedings against the Kenya Revenue Authority (KRA) over housing levy deductions. This is while it’s emerging that the Attorney General advised KRA against the deductions, saying that the levy lacks legal basis.

Meanwhile, KRA has made a U-turn on its decision to exempt small businesses and farmers from the eTIMS system. The authority has launched a new system - dubbed eTIMS Lite - that will require even informal businesses to use it when processing invoices.

As always, we’ve included some of our favourite personal finance articles in our Finance Tips section below.

Let’s dive in.

NEWS RECAP

What happened this week

⚖️ LSK Sues KRA as Housing Levy Saga Continues

The Law Society of Kenya (LSK) has announced that it will initiate contempt of court proceedings against the Commissioner General of the Kenya Revenue Authority (KRA) over the deductions of the housing levy, which it deems illegal.

The society has asked Kenyans who have been deducted the housing levy to volunteer their payslips to be used as evidence in the case they are preparing. They have promised to redact identifying information to protect the volunteers from punishment. Read More.

The move by LSK is the latest development in the housing levy saga:

• June 27, 2023: Finance Act, 2023, which introduced the Housing Levy, is gazetted. 

• July 1, 2023: Housing Levy deductions of 1.5% on employee gross income matched by employer begin. 

• November 28, 2023: High Court declares the levy unconstitutional, null and void. Hours later, a stay order is issued by the same court allowing deductions to continue till January 10, 2024. 

• January 5, 2024: Court of Appeal orders that the status quo be maintained.

• January 26, 2024: Appellate Court affirms High Court’s ruling that levy is illegal ending stay order.

• AG’s Advice General: AG Justin Muturi tells KRA that there is no legal basis for the taxman to continue collecting the levy.

• KUPPET: The Kenya Union of Post Primary Education Teachers (KUPPET) threatens the Teachers Service Commission (TSC) with legal action if housing levy deductions are not refunded.

• February 21, 2023: National Assembly passes the government-backed Affordable Housing Bill, 2023 to provide legal framework for deductions.

• April 2024: The Senate is expected to fast track the processing of the Bill by April. Read More.

🏛️ KRA Tax Shocker for Farmers, Small Traders

KRA has backtracked on its decision to exempt small business traders and farmers from producing invoices through the electronic tax invoice management system (eTIMS). Initially, KRA had exempted farmers and small businesses with a yearly turnover of less than Ksh5 million.

KRA has launched a new system dubbed eTIMS Lite that will accommodate non-VAT registered taxpayers. This is in a bid to expand the tax net. The system will be accessible through the eCitizen platform and USSD code *222#. Read More.

🚫 All-out War on Illicit Liquor Intensifies

The government has declared drug and substance abuse a major national security threat. As a result, the Interior Ministry has issued measures to combat the trade, consumption and abuse of illicit alcohol, narcotics and psychotropic substances in the country. Read More.

Some of these regulations include:

• Licence Revocations: All second-generation alcohol distillers and manufacturers’ licences suspended, to be vetted afresh in 21 days.

• Fresh Applications: Manufacturers to have quality control laboratories operated by competent laboratory analysts.

• Residential Areas: Any licence issued to a bar by the county government within residential areas or around schools is null and void.

• Chemists and Agrovets: Licences to be submitted for verification within 30 days. Deregistration mandated for issuing prescription drugs without a prescription.

• Counterfeit Liquor: Manufacturers and distillers to be deemed complicit for failure to report counterfeits

• Documentation: Alcohol manufacturers to document all traders in their distribution chain for traceability. Information to be included in product labels.

• Branded Vehicles: Alcohol and tobacco distribution vehicles shall be branded with a specific colour at the direction of the Ministry of Interior.

• Property Seizure: All vehicles and buildings used in storage, manufacturing, and trafficking of drugs shall be seized and deemed government property.

• Operating Hours: No bars or alcoholic outlets are allowed to operate beyond stipulated time (5pm-11pm weekdays, 2pm-11pm weekends).

• Landlords: Anyone renting out space for bars and wines-and-spirits shops in prohibited areas to be held liable.

• Public Officers: Not allowed to own or operate a bar directly or via a proxy. Ordered to close down establishments or resign from public office. Read More.

📈 CBK Offers 16% Return On New 10-Year Bond

The Central Bank of Kenya (CBK) is shifting gears from offering short and medium term bonds to long term bonds with its new 10-year bond at a 16% return. 

The CBK is curbing aggressive bidding on government bonds by setting the bond return at 16%. This comes after the apex bank walked away from Ksh47.7 billion from aggressive bidders in February’s infrastructure bond sale. Read More.

📲 M-Pesa Processes Ksh700m Inua Jamii Transfers

Following a directive by President Ruto during last year’s Jamhuri Day, an estimated 300,000 people have benefited from the Inua Jamii programme through M-Pesa.

The platform has processed Ksh700 million under the government cash transfer programme. About 100,000 beneficiaries are yet to enroll through the USSD code *222# as the March deadline looms. Read More.

Want more details? Check our full weekly update here:

MONEY TIPS & TOOLS

This week’s finance tips

Welcome to Money254's Money Tips! Here, we share quick and easy tips that make understanding and managing your money a breeze. We break down the tricky parts of your finances and the financial landscape, making it simple and clear for you. Stay tuned for helpful tips every week.

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Investment mistakes to avoid

This week’s video will shed light on common investment mistakes and, more importantly, how to steer clear of them. Whether you're a seasoned investor or just starting on your investment journey, understanding and avoiding these pitfalls can make all the difference in achieving your financial goals. You can also read more about it here.

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4 Biggest Investment Mistakes to Avoid #Money254 #Investments #Investing #Moneytok #Personalfinance #Fyp

That’s a wrap for this week’s Money Weekly!

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Eric and the Money254 editorial team.