Tax Alert On Tax Laws (Amendment) Act, 2024 & Tax Procedures (Amendment) Act, 2024

The President assented the Tax Laws (Amendment) Act, 2024 and the Tax Procedures
(Amendment) Act, 2024 on 11th December 2024. The tax amendments through the
aforementioned Acts are effective from 27th December 2024 and are as a result of withdrawal of the Finance Bill, 2024 after public outcry on the punitive tax proposals that were to be introduced effective 1st July 2024. These Acts have amended various provisions in the Income
Tax Act, Value Added Tax Act, Excise Duty Act, Miscellaneous Fees and Levies Act and the Tax Procedures Act.

Overall, the positive amendments touching on employees include increase in thresholds for non-taxable benefits like meal benefit and non-cash benefits; increase in mortgage interest relief; increase in contributions to pension schemes that are not subject to tax; deductibility
of Affordable Housing Levy, Social Health Insurance Fund and post-retirement medical fund contributions before arriving at employees’ taxable pay and tax free amounts for individuals upon withdrawal from pension schemes and provident funds.

Additionally, the tax amnesty on accrued penalties, interest and fines relating to principal taxes that were due by 31st December 2023 has been extended to 30th June 2025 subject to payment of all the outstanding principal taxes.

From a corporate income tax perspective, the notable changes are the replacement of Digital Service Tax with Significant Economic Presence Tax and the introduction of Minimum top up tax for Multinational Enterprises.

Further, there are various reclassifications in the Value Added Tax status of various items and increases in excise duty rates of various items. The Railway Development Levy has been increased from the rate of 1.5% to 2%, which will result in an increase in the cost of imported items.

More details on amendments to the various tax statutes are contained in this tax alert.