Happy new month and welcome to the eighth Money Weekly Roundup of 2024! 

This week, Health CS Susan Nakhumicha pushed the start of SHIF contributions to July, a surprise last-minute change after earlier announcing that deductions would commence this month. The period between March and July will be used for registrations.

Meanwhile, Kenyans should brace for more taxes in 2024 according to the 2024 Budget Policy Statement. This comes as the KRA failed to meet its targets for the first half of the 2023/24 fiscal year.

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

📈 New Taxes Expected in 2024

Even as Kenyans enjoy the brief relief from SHIF deductions, they should be bracing for more taxes that are coming their way.

According to the 2024 Budget Policy Statement, the government aims to boost revenue collection to 20% of GDP by targeting to collect Ksh2.95 trillion in taxes.

Here are the expected changes in the taxation instrument:

• Excise duty: Increase in excise duty on alcoholic beverages, cigarettes, tobacco and sugar containing products.

• Consumption tax: Review of the requirement on companies selling alcoholic drinks and beverages to pay excise duty within 24 hours after the drinks have left the stockroom. 

• Digital service tax: Onboard residents to the digital service tax. Currently, the tax applies to non-residents only. 

• Withholding tax: Introduction of a 5% withholding tax on agricultural produce delivered to organised groups and corporations. 

• Preferential corporate tax: Progressive phasing out of preferential corporate tax rates.

• Tax Exemptions: Rationalisation of tax exemptions for both corporate entities and individuals.

• Minimum tax: Re-introduction of a minimum tax, although previously ruled unconstitutional. 

• Carbon Tax: Introduction of a carbon tax.

• High-net-worth: Introduction of a high-net-worth individuals’ tax. 

• Reduction of the VAT rate by 1%

• Adjustment of the VAT registration threshold from Ksh5 million to Ksh8 million.

KRA is also expected to intensify taxpayer audits, add more staff, and use technology to achieve its target. Furthermore, the government is expected to automate and streamline government services and integrate the system with KRA. Read More. 

🏥 Relief as SHIF Deductions Deferred

Health Cabinet Secretary Susan Nakhumincha has deferred the commencement of Social Health Insurance Fund (SHIF) deductions to July. The deductions were planned to kick off in March.

While announcing the change, the CS added that SHIF registrations will take place between March and July. Members previously registered to NHIF will register for SHIF afresh.

The Ministry of Health will, in the intervening period, be working on streamlining several issues necessary for the implementation of the fund including: 

• There is not much clarity about the mean testing tool. 

• Involvement of devolved units in the transition committee.

• The classification of polygamous families as multiple households.

• How long should it take before a spouse is removed from the health plan? 

In the regulations presented by the ministry, adults over the age of 25 without a formal job are required to pay a mandatory Ksh300 monthly contribution for the medical cover. Read More.

🚫 Kenya Grey-Listed Over ‘Wash Wash’

The global anti-money laundering watchdog, the Finance Action Task Force (FATF), has put Kenya on the grey list for lack of compliance with international standards against money laundering and terrorism financing.

Being greylisted is a huge dent in a country’s reputation in the global financial system. The reputational damage could lead to reduced foreign direct investments and the downgrading of the country and businesses, which might increase the cost of accessing financing. Read More. 

🤝 KRA Waives Ksh209bn Fines

KRA has reported that at least 227,071 taxpayers have benefited from the ongoing Tax Amnesty Program. These taxpayers have been granted Ksh209 billion in waivers for accrued interests and penalties.

The programme started on September 1, 2023, and is expected to run until June 30, 2024. 

Taxpayers qualify for the programme after they pay the principal taxes they owe KRA. As a result, KRA says it has collected a total of Ksh14.5 billion. Read More.

💪 Saccos are Paying High Dividends

The Sacco sector has shown tremendous growth in 2023, hitting over a trillion in assets. Sacco members are the beneficiaries of this growth, as Saccos are giving higher dividends and rebates. Read On.

Here are the Sacco dividends on share capital released so far: 

• Nyati Sacco - 21%

• Tower Sacco - 20%

• Ports Sacco - 20%

• Nation Sacco - 20%

• Kenya National Police DT Sacco - 17%

• Yetu Sacco - 19%

• Olin Sacco - 17.5%

• Winas Sacco - 16%

• Trans Nation Sacco - 15%

• Solution Sacco - 15%

• Mentor Sacco - 15%

• Capital Sacco - 15%

• New Fortis Sacco - 14%

• Harambee Sacco - 12%

• Harambee Sacco - 12%

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.

MONEY254 #MONEYTOK OF THE WEEK

Have you paid yourself first?

In the hustle and bustle of daily life, it's easy to get caught up in expenses and other financial obligations. However, developing a plan that gives priority to your financial health can make a significant difference. In this week’s video, we are talking about the concept of paying yourself first and offering practical tips on how to make this financial practice a cornerstone of your wealth-building journey. You can also read more about it here.

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Do You Pay Yourself First When You Get Your Salary? #Money254 #Savings #payingyourselffirst #Moneytok #Personalfinance #Fyp

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

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Eric and the Money254 editorial team.