While the finance committee of the National Assembly tabled its report on Tuesday afternoon with a few amendments on tax measures in the midst of ongoing protests in Nairobi and other cities, some controversial proposals remain.
- There’s a proposal to increase the Road Maintenance Levy from KSh 18 to KSh 25 per liter on fuel, which will raise the price further.
- Additionally, the committee upheld the proposed withholding tax on interest from Infrastructure Bonds (IFB) with tenors of at least three years at the rate of 5% for residents and 15% for non-residents.
- The committee retained the proposed increase in import declaration fee from 2.5 percent to 3.0 percent, and retained a proposal to impose excise duty on digital credit.
The Committee recommended reducing the earlier agreed KSh 2 million penalty associated with the integration of the eTIMS, missing clarity on the new recommended figure. It also recommended the Significant Economic Presence (SEP) tax proposed to reduce the rate of deemed income from 20% to 10% of gross turnover.
Further, the committee maintained withholding tax on payments made for goods supplied to public entities at 3% for residents and 5% for non residents. It maintained the proposal to increase the timeframe for issue of objection decisions by the KRA from 60 days to 90 days.
The committee retained the proposal to exempt reimbursement of expenses incurred in asset purchase in the course of official duties by public officers.
The committee also retained the removal of the threshold of KSh 24,000 for payments such as management/professional fees made to residents stating it will serve to expand the tax base.
The committee rejected the removal of the 2% levy implemented through the Nut and Oil Crops Directive (NOCD) on all crude oils.
The committee took up the introduction of a minimum top-up tax of 15% on resident individuals or entities with a permanent presence in Kenya, affiliated with multinational groups earning over EUR 750 million annually.
Next Steps on Tax, Expenditures
On Wednesday, the committee chair Kuria Kimani moved the motion on the report of the bill for debate. After, Members of Parliament (MPs) have a chance to raise any amendments proposals by Thursday 19th afternoon and later vote on the report of the committee in its second reading.
During its third and final reading, MPs will move amendments approved by the speaker and later take a final vote on the bill on Tuesday 25th June.
