The re-write of the Income Tax Act by Treasury has been the subject of a consultation process that commenced in early 2020. Parliament did not pass the legislation with the 2023 Budget as expected and so our commentary is based on the ninth draft of the proposed New Income Tax Act.
As this commentary is not based on the final legislation, it should be used as a guide only. The new legislation may be effective from 1 January 2024 although this is not yet certain. Transition provisions and new Regulations are to be drafted and are not yet available. We have highlighted a number of key changes to be introduced by the new legislation below.
Key changes to be introduced by the new legislation.
- Salary & Wages Tax
- Business income
- International tax
- Sector specific
- Capital gains tax
Appendix I
CFO / Head of Tax checklist
Leaders within finance and tax functions should consider the impact of the following proposed changes as a priority.
- CGT is introduced
- Cross border transactions
- Employee Benefits
- Management fees
- Finance leases
Appendix II
Proposed Depreciation Rates
- Motor vehicles; buses and minibuses with a seating capacity of less than 30 passengers; goods vehicles with a load capacity of less than 7 tonnes; computers and data handling equipment; software; and construction and earthmoving equipment.
- Buses with a seating capacity of 30 or more passengers; goods vehicles designed to carry or pull loads of 7 or more tonnes; specialised trucks; tractors; trailers and trailer-mounted containers; and plant and machinery used in manufacturing, mining, forestry, or farming operations.
- Vessels, barges, tugs, and similar water transportation equipment; aircraft; office furniture, fixtures, and equipment; and any depreciable asset not included in another Category (other than a business intangible).
- Structural improvement.
- Business intangibles.
The rate of depreciation applicable to a depreciable asset that has a cost of less than K1,000 is 100%. The straight-line rates of depreciation applicable to business intangibles are - (a) for preliminary expenditure, 25%; (b) for a business intangible with a useful life of more than 10 years, other than a business intangible referred to in Paragraph (a) or (c) of this clause, 10%; (c) for a long-term lease, is 100% divided by the term of the lease remaining at the date of acquisition; and (d) for any other business intangible, 100% divided by the number of years in the useful life of the intangible.