The Kenya Bankers Association (KBA) has moved to court to challenge the move to tax 0.05 per cent of Ksh 500,000 and above transacted through banks or other financial institutions.
Treasury Cabinet Secretary Henry Rotich announced the excise duty on June 14 in his budget speech for the 2018/2019 financial year, adding that the proceeds of the taxes would go towards financing the universal healthcare plan.
“In order for the government to get a fair share of revenue from these financial activities and to finance critical programmes, I propose to introduce a ‘Robin Hood Tax’ of 0.05 per cent on any amounts of Ksh500, 000 or more transferred through banks and other financial institutions,” he said.
KBA says that the Finance Bill 2018 has not provided any guidelines on how the duty is to be applied and no specific exclusions from the duty has been provided.
“The implementation of the duty will require changes to the computer programs of all members which cannot be done in this limited time,” read court papers.
The association has asked the court to find that the new tax measures negatively impact the economy and lead to erosion in investment returns between 1.0 to 5.0 percent depending on the nature of the fund and investment strategy. The proposed duty will also significantly hamper the Country’s vision 2030 aspirations due to the unattractiveness of cost of carrying out transactions in Kenya as a result of the tax.
KBA through lawyer Kenneth Alison Franser argues that there was no public participation in financial matters in relation to the introduction of the new excise duty adding that the imposition of a new duty on less than 10 days’ notice is neither reasonable nor procedurally fair.
“A conservatory order do issue to delay the implementation of the excise duty introduced by the finance Bill 2018 until such time allowed for alteration of the computer systems operated by the banks to implement the charge of the duty,” reads court documents.
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