In a move aimed at providing substantial relief to consumers and businesses, the government has announced major changes to the Finance Bill. These modifications, intended to ease financial burdens and boost economic activity, feature several significant adjustments to the Value Added Tax (VAT) system and other fiscal measures.
Key Changes to VAT:
- VAT on Bread Removed: The 16% VAT on bread has been abolished, making this staple food more affordable for lower-income households.
- VAT on Sugar Transportation Removed: The VAT on transporting sugar has been lifted, reducing costs for both consumers and producers.
- VAT on Financial Services and Foreign Exchange Transactions Removed: Eliminating the VAT on financial services and foreign exchange transactions will lower banking and currency exchange costs.
- No Increase in Mobile Money Transfer Fees: The government has decided against increasing fees on mobile money transfers, supporting the widespread use of these services, particularly in rural areas.
Additional Tax Adjustments:
- Motor Vehicle Tax Removed: The 2.5% Motor Vehicle Tax has been abolished, lowering the cost of vehicle ownership and operation for individuals and businesses.
- Excise Duty on Vegetable Oil Removed: Scrapping the excise duty on vegetable oil will reduce its price, helping to lower overall food costs.
- Eco Levy Exemptions for Locally Manufactured Products: Locally made products like sanitary towels, diapers, phones, computers, tyres, and motorcycles will be exempt from the Eco Levy, supporting local manufacturing and reducing consumer costs.
- Income Tax Deductibility for Housing Fund and Social Health Insurance Levies: Contributions to the Housing Fund and Social Health Insurance will now be income tax deductible, providing financial relief to contributors. These levies will not be subjected to income tax, allowing contributors to retain more of their income.
These amendments demonstrate the government’s commitment to creating a more supportive economic environment and addressing cost of living concerns. By removing various taxes and levies, the government aims to lower prices for essential goods and services, stimulate economic growth, and reduce operational costs for businesses.
Stakeholders from various sectors have welcomed these changes, expecting a positive impact on the overall economy. The government remains hopeful that these measures will promote a more equitable and prosperous society.
For more updates on the implementation and broader economic implications of these changes, stay tuned to our financial news section.