Githae proposes major changes in tax laws

June 14, 2012
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Githae acknowledged the need to enhance the tax dispute resolution mechanism/MUTHONI NJUKI
NAIROBI, Kenya, June 14 – Finance Minister Njeru Githae has proposed the amendment of several tax laws in an attempt to reform the tax system for greater efficiency and effectiveness.

Speaking in Parliament while presenting the budget statement for the fiscal year 2012/2013, Githae proposed to amend the Customs and Excise Act to ensure that no person enjoys tax exemption by the virtue of holding a State office and to ensure fast processing of applications for renewal of excise licenses.

“I propose to amend the Income Tax Act to align their taxation with that of other non-resident taxpayers who engage in other businesses and whose base is in Kenya,” he stated.

Githae acknowledged the need to enhance the tax dispute resolution mechanism in order to instill professionalism and equity in the administration of tax cases.

“I propose to amend the Income Tax Act to provide for qualifications for Local Committee and Tribunal members and specify the period the Commissioner is required to file his statement of facts to the Local Committee,” he announced.

“Effective dispute resolution mechanism allows for a faster and efficient settlement of tax disputes and in the past there have been instances where the tribunal has not performed optimally due to failure by some members to perform their duties,” he explained.

In order to ensure effective and uninterrupted service to taxpayers, Githae proposed to amend the Act to provide for additional circumstances under which members of the tribunal may cease to hold office.

To provide oversight over the operations of tax agents and to promote professionalism, Githae proposed to amend the KRA Act to allow the Minister to make regulations for persons authorized to act as tax agents and he confirmed that the finance ministry will review and issue a report on the Income Tax and Customs and Excise Tax Acts by the end of the fiscal year 2012/2013.

Githae also confirmed that the finance ministry has finalised the review of the VAT law to align it to the Constitution by making it simpler and modern, based on international best practices.

“After extensive consultations with key stakeholders, including the Departmental Committee of Parliament, the draft bill was discussed and approved by the Cabinet and I am pleased through this budget, to table the VAT Bill 2012 for debate and approval by this House,” he said.

“My ministry has commenced work toward the review of the Income Tax Act and Customs and Excise Tax Act and we shall also undertake a holistic review of the administrative structure of KRA to give effect to the objective of these reforms,” he added.

He noted the country’s large reservoir of mineral resources and revealed that the Finance Ministry is working to institutionalise a comprehensive policy and legislative framework covering licensing, revenue sharing, taxation and sustainable use of revenues generated from such resources.

“My ministry, working with relevant line ministries, will shortly organize a workshop to deliberate and draw a conceptual framework on how to take this process forward in an inclusive manner,” he said.

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