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US curbs Kenya on tax increase

Ruto is scheduled to meet with Biden in Washington

17-05-2024 by Freddie del Curatolo

The United States is putting the brakes on the Kenyan government and its eagerness to recover money from Kenyan taxpayers and foreign companies in order to deal with public debt and continue to grow the country, which has now moved from the third tier to 'developing'.
It is well known that May is the period of decisions and anticipations, because the Finance Bill is being drafted, to be approved by the Nairobi parliament in June and then translated into law with the signature of President William Ruto.
From the anticipations that the Kenyan Treasury provided to the media last week, the increases relate to consumer staples such as bread, comfort goods such as alcohol, and new annual taxes that Kenya had not considered until now. One of these is the car tax, which we reported on yesterday and details of which can be found here: https://malindikenya.net/en/articles/news/last-news/new-road-tax-on-cars-in-kenya.html

 


But also on the government's plate is the raising of the tax rate, currently set at 14%.
Ruto, speaking at State House before an audience of university students, hinted that by the end of his term, he would like to raise it to 22%. One can therefore assume a 'soft' transition, with increases of 2 or 3% per year.
While the opposition is threatening new street protests, as happened last year, when demonstrations against the cost of living paid with the blood of 30 dead and 305 injured (data from humanitarian organisations), the US ambassador, Meg Whitman, has warned the Ruto government.
In a television interview, Washington's representative in Kenya explained that "taxation is a global issue and American companies often stress the need for Kenya to keep taxes low and stable," warning Nairobi of a move that could demotivate foreign investors. 


"Companies plan their investments with a long-term perspective, typically five to seven years. Therefore, it is critical that tax rates remain constant during this period,' Whitman said. Meanwhile, President Ruto has been invited directly to the White House and will leave for the US in the coming days. He is the sixth head of state to be received directly by Joe Biden, and this speaks volumes about Kenya's importance and potential, as well as its strategic interest. The Kenyan press speculates that Ruto may make other requests for loans and financing, so that he can partially satisfy the US market and not raise taxes more than necessary.

TAGS: tasseUsaRutoBiden

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