Stakeholders making submissions on the proposed Tax Laws and the Business Laws (Amendment) Bill are seeking an extension of the tax amnesty to cover the taxes due and not paid between December 2022 and December 2025 to allow more taxpayers to take advantage of the program to settle outstanding tax balances.
The Stakeholders who were making submissions in relation to the Tax Procedures (Amendment) (No 2) Bill National Assembly Bill No 46 of 2024), The Tax Laws (Amendment) Bill, (National Assembly Bill No. 47 of 2024) and the Business Laws (Amendment) Bill ( National Assembly Bill No. 48 of 2024).
The Bills are currently being subjected to stakeholder engagement at the Kenyatta International Convention Centre (KICC) by the Kimani Kuria-led Departmental Committee on Finance and National Planning.
Audit Firm PWC in submissions presented by Director Titus Mukora and Associate Director, Edna Gitachu, told the Committee that while they welcomed the proposed extension of the tax amnesty program, the proposed extension only relates to principal taxes due but not paid before December 31, 2022.
They noted that a further extension would see more taxpayers move fast to become tax compliant.
“It is highly likely that a further extension of amnesty of taxes due and not paid beyond December 22, will lead to additional taxpayers wanting to take advantage of the extension to resolve outstanding tax balances and disputes, including Alternative Dispute Resolution Mechanism”, Ms. Gitachu told the Committee.
On their part, Kieti Law LLP representing Cliff Dekker Hofmeyr (CDH) urged the Committee to consider extending the period covered by the amnesty extended to the period between 31st December, 2023 and December 2025 and not the proposed June, 2025.
“The Bill has not come to force and taxpayers will have a limited period of 6 months to take advantage of the program if left at June 2025. Previous Bills provided a period of at least one year”, Kanyi told the legislators.
Other provisions of the Bills that attracted a lot of attention include the proposed imposition of significant economic presence with a majority of stakeholders calling on the Committee to define the thresholds, which are currently not provided for in the Bill.
Appearing before the Committee earlier, Safaricom PLC proposed the introduction of a provision in the Income Tax Act to allow Telecommunications companies to claim investment allowances on the cost incurred in acquiring spectrum licenses.
They argued that the proposal would lead to lower costs which will be passed on to the final consumer thus increasing affordability of telecommunications services.
The telco further noted that the move will increase network coverage, thereby making Kenya a technology hub,but it will also be in line with the government’s technological advanced agenda under BETA and Vision 2030,which is keen on increasing the penetration of ICT in Kenya.
Safaricom also proposed to the Committee to consider retaining the rate of Excise Duty on fees charged on telephone and internet data services at 15 per cent (Clause 25 (b) (i) of the Tax Laws (Amendment) Bill, 2024.
The telco told the Committee that maintaining the excise duty rate at 15 per cent would promote the industry’s stability and predictability efforts, promote inclusivity, and foster increased uptake of online jobs thus increasing employment opportunities.
Making their submissions to the Committee, the Kenya Manufacturers Association (KAM) proposed the establishment of a Tax Refund Fund ring-fenced to specifically cater for all refunds.
They noted that payment of refunds in the country has faced a lot of delays and affected the liquidity of businesses, especially for manufacturers. The delays have been attributed to the process of reversing back the money once it has been paid into the national consolidated fund.
They also observed although that government has already acknowledged the challenges of refunds and has over the years addressed backlogs of refunds owed to manufacturers, the issue continues to recur creating a need for a sustainable solution.
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While responding to their concerns Kuria Kimani who emphasized on the Committee’s resolve to ensure that Kenya becomes a vibrant manufacturing country, pledged that the Committee would seek audience with the Kenya Revenue Authority (KRA) on the matter.
“We are making every effort as a Committee to make it conducive for manufacturers to thrive in their businesses. We shall be taking KRA to task even as we assess the implementation status of our recommendations that they effect tax refunds within three months”, Kuria assured.
While commended the Committee on Finance and National Planning for moving to reduce the cost of feed including the move to zero-rate inputs or raw materials for the manufacture of animal feeds (through the Finance Act, 2023), the Manufacturers argued that despite these efforts, animal feeds remain to be a significant cost for farmers.
To support the livestock sector, they pointed out the need to further reduce the costs related to animal feeds, as this will enhance competitiveness.
At the same time, the Committee has called on the stakeholders to become ambassadors of the progressive provisions being adopted by the Committee and by extension the House, to help counter misinformation on the provisions of the laws passed by the House.
Reflecting on the period during the consideration of the Finance Bill, 2024, the lawmakers faulted the stakeholders for not coming out to concede that the Committee had indeed incorporated their views in its report tabled in the House.
“You need to become agents of the good laws passed by the Committee. Even after we incorporated the views of the stakeholders in our report to the House, many stakeholders failed to become the voice of reason in their respective sectors “Kimani recounted The Committee continues with the stakeholder engagements on Thursday.
By Our Reporter
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