Businesses & Financial News

Treasury calls for input on review of tax policies

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By Steve Umidha

The national treasury has called on businesses and individuals to have their say on how investment taxes should be restructured to drive and sustain growth in the country.

In a policy paper which requested views from both public and private sectors on the proposed revision of Kenya’s revenue system, the finance office noted that it wants to understand how present policy measures shape investment decisions by businesses.

The national tax policy seeks to among other issues expand tax base to boost fairness and equity in tax system as well as embracing the international best practice in tax administration.

Further, the draft policy, according to the office, is aimed at creating certainty predictability of tax rates and tax bases, enhance tax compliance, and reduce tax expenditure, among others.

“This National Tax Policy provides policy recommendations to address the challenges currently facing the taxation regime in the country such as huge informal sector that is hard to tax, unpredictability of tax policies, huge tax expenditure poor compliance among others,” noted Treasury CS Ukur Yatani in statement, calling on such views to be submitted by August 5.

This comes amid concerns that smartphones and SIM cards in Kenya are set to get more expensive because of the Finance Act 2022 which was signed by President Uhuru Kenyatta in June. Its impact has already seen players like mobile operator, Safaricom start the implementation of a Sh50 excise duty on SIM cards and a 10 percent excise tax on imported phones as part of the move.

“Effective today, Safaricom will be reviewing their SIM card pricing to Sh50 + Sh50 airtime first top up to include the excise tax. Phone prices will be adjusted to include the 10 percent excise tax and 25 percent import duty as existing stock levels are replaced with new stock on which the new taxes apply,” reads in part Safaricom’s notice to its consumers.

Kenya’s tax system notoriously continues to suffer numerous challenges leading to underperformance in revenue collection with Kenyans painstakingly the most taxed.

In fact, Kenya ranked third after South Africa and Swaziland as leading African countries where individuals pay more tax than profit taxes from corporations, according to a 2018 report by Organization for Economic Co-operation and Development (OED).

Despite recording an impressive revenue collection of Sh2.031trillion for the financial year 2021/2022 which ended in June 2022 – the country’s tax agency Kenya Revenue Authority (KRA) is still understood to use scare tactics including writing ‘bullying’ letters to taxpayers on their tax obligation.


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