Retirees in Kenya can breathe a sigh of relief as the National Assembly opposed new pension tax proposals.
The finance bill had proposed the removal of existing tax incentive, that is, income exempt from tax ; income of National Social Security Fund (NSSF) and bonus, overtime, and retirement benefits not exceeding 10 percent.
National Assembly Departmental Committee on Finance and National Planning in their submission in a report on the Consideration of the Finance Bill, 2020 has opposed taxation on pensions. Chairman, Joseph Limo while presenting the bill for the second reading revealed that the proposal to tax retirement benefits had been dropped following consultation with the National treasury.
The committee opines that subjecting income of NSSF to tax will have a negative impact on the interest earned by members. In addition, the introduction of taxes to pension will discourage savings into pension schemes as it will lower pensions and reduce disposable income to retirees. Most pensioners at the age of 65 are not able to supplement the pension income to cushion them against the effects of inflation.
LPG GAS TAX OPPOSED
In addition, the committee maintained that liquefied petroleum gas (LPG) and propane should remain zero rated because imposing VAT on LPG will adversely affect Kenya’s aspired socio-economic transformation.
Maize flour to be Zero-rated
The committee adopted the proposed amendment to include the supply of maize (corn) flour, cassava flour, and wheat or meslin flour as zero-rated products that will make these products cheaper and affordable to Kenyans.
Betting set to come back
The parliamentary committee also agreed to remove excise duty on betting. This is to reverse the negative effects of this tax on the industry which led to the closure of betting companies in Kenya, yet international players continue to operate.
The committee says that the proposed amendment to the various tax laws as contained in Finance Bill 2020 are expected to raise additional revenue of Ksh38.85 billion for the FY 2020/21 budget.
Mr. Limo recommends that the National Assembly adopts the Finance bill with the amendments.
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