The year 2023 has been marked by significant legislative and policy developments in Kenya, shaping the landscape for both private and public sectors. As we conclude this year, let’s revisit the key highlights and milestones that unfolded, with a particular focus on insights covered by Vellum Kenya.

Tax Procedures (Common Reporting Standards) Regulations, 2023

Effective: 1st January 2023.

The Tax Procedures (Common Reporting Standards) Regulations, 2023 marked a crucial step in enhancing global tax transparency. Enforced from the beginning of the year, these regulations require Reporting Financial Institutions (RFIs) to adhere to due diligence procedures outlined by the Organization for Economic Co-operation and Development (OECD). Compliance involves submitting declarations detailing financial data for each Reportable Account, ensuring transparency in cross-border transactions. Read more.

Communications Authority Framework for Emerging Technologies Regulatory Sandbox

The Communications Authority introduced a draft framework for an emerging technologies regulatory sandbox, inviting stakeholder comments. This initiative aims to foster innovation by exploring innovative regulatory solutions, ultimately shaping the future of the information and communications landscape. This collaborative approach facilitates open collaboration, economic growth, and improved lives for citizens. Read more.

Green Fiscal Incentives Policy Framework

The Green Fiscal Incentives Policy Framework aspires to guide Kenya toward a low-carbon, climate-resilient green development trajectory. By employing various fiscal and economic mechanisms, this policy encourages green fiscal reforms, promoting climate-friendly production methods and mobilizing climate finance from diverse sources. Read more.

The Privatisation Act 2023

President William Ruto assented to the Privatisation Act 2023, signifying a significant shift in Kenya’s public entity privatization landscape. Following the passage of the Act, the Cabinet Secretary recommended the privatization of 11 parastatals including National Oil corporation, Kenya Seed Company, KICC, and Kenya Pipeline Company among others. However, the High Court has temporarily suspended the privatization of the parastatals following a suit lodged challenging its constitutionality. This highlights the strategic importance of these state firms, with combined assets worth Ksh 200 billion. Read more.

Dropping the ICT Sector Local Equity Participation Rule

To encourage foreign investment and enhance local participation in the ICT sector, paragraph 6.2.4 of the National Information Communications and Technology Policy Guidelines, 2020, on “Equity Participation” was deleted. This policy shift aims to promote innovation, job creation, and knowledge transfer within the local ICT ecosystem. Read more.

Central Bank of Kenya Foreign Exchange Code

Released on 22nd March 2023, the Central Bank of Kenya Foreign Exchange Code draws inspiration from the Global Foreign Exchange Code. Tailored to the Kenyan context, it sets standards to strengthen and promote the integrity of the wholesale foreign exchange market, reinforcing Kenya’s flexible exchange rate regime. Read more.

National Tax Policy

In response to challenges within Kenya’s tax system, the National Treasury drafted the National Tax Policy in 2022. Following a public participation process, the updated version, presented to Parliament on 27th April 2023, aims to establish an equitable and efficient tax system, addressing issues such as the untaxed informal sector and unpredictable tax regulations. Read more.

Finance Act 2023

The Finance Act 2023 introduced diverse tax measures to expand the tax base and streamline tax administration. While applauded for its efforts, certain provisions faced constitutional challenges, leading to a court ruling that deemed the affordable housing levy unconstitutional but temporarily suspended the order until 10th January 2024. In what seems as an effort towards rectifying the issue, the Affordable Housing Bill 2023 was tabled in Parliament. The Bill seeks to provide a framework for access to affordable housing. Read more.

Kenya Not Going the CBDC Route Any Time Soon

In light of Kenya’s current payments landscape, the implementation of a Central Bank Digital Currency (CBDC) is not a priority in the short to medium term. The Central Bank of Kenya (CBK) remains committed to monitoring CBDC developments and engaging in informed decision-making in the future. Read more.

Medium–Term Revenue Strategy

Released by the Ministry of National Treasury and Economic Planning, the Medium–Term Revenue Strategy aims to enhance Kenya’s tax revenues, increasing the revenue yield from 13.5% to at least 20% of the GDP by 2026/27. Aligned with the East African Community target, this strategy addresses declining tax revenues and rising fiscal deficits. Read more.

Digital Health Act 2023

The Digital Health Act, signed on 19th October 2023, forms part of a comprehensive set of health-related bills to realize Universal Health Coverage plans. With a focus on data security and privacy, this act outlines measures to ensure the confidentiality and security of sensitive personal health data. The high court has however slammed the brakes on the implementation and enforcement of the Digital Health Act 2023 until a case challenging its legality is heard. Read more.

Social Health Insurance Act 2023

In line with Article 43 (1) (a) of the Constitution, the Social Health Insurance Act, 2023, establishes a framework for the management of social health insurance. Aimed at entrenching the right to health and universal health coverage, this act promotes strategic purchasing of healthcare services and enhances pooling of resources. The Regulations under the Act provide for a deduction of 2.75% of employees gross salary per month towards the Fund. The high court has however slammed the brakes on the implementation and enforcement of the Social Health Insurance Act, 2023 until a case challenging its legality is heard. Read more.

Accelerating Universal Healthcare

The proposal to scrap the National Hospital Insurance Fund (NHIF) to create the Primary Healthcare Fund, Social Health Insurance Fund, and the Emergency, Chronic, and Critical Illness Fund reflects a commitment to delivering Universal Health Coverage. This aligns with President William Ruto’s promise during the presidential election, emphasizing healthcare within the Bottom-Up Economic Transformation Agenda (BETA).

Conclusion

The year 2023 has been marked by key legislative and policy changes that have shaped the country’s economic and regulatory landscape. As we reflect on these key developments, it becomes evident that adaptability and strategic planning will be paramount for businesses and stakeholders navigating this evolving environment. Vellum Kenya remains committed to providing insights and analyses to guide you through these dynamic times.