THE FINANCE ACT 2018

After much drama, the Finance Act 2018 was finally granted Presidential assent on 21 September 2018.  The new tax provisions will have significant impact on both the cost of living and of doing business in Kenya and some of those effects are already being felt.  The need for these tax increases is driven by two factors: the debt servicing requirement which by all accounts will require almost half of targeted collections and the high government recurring expenditure. Steps to reduce these heavy outflows are going to be difficult in the current economic and political climate. It is also debatable as to whether revenue collections will actually meet targets which judging by recent history seems unlikely.  The upshot will be an increased deficit which will clearly be a concern.