Treasury pledges fair tax overhaul

October 22, 2009
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, NAIROBI, Kenya Oct 22 – Treasury says it will be paying particular attention to tax exemptions as it seeks to overhaul the current tax system.

Finance Permanent Secretary Joseph Kinyua said this would help spur investment in the country owing to the fact that many investors complain Kenya’s tax system remains unattractive to facilitate any meaningful investment.

He said they were looking at all elements of the current tax system to identify focus areas that would ensure the process is done systematically to ensure no loopholes are created.

“We are looking at it holistically that is from VAT, income tax, customs and others so that we don’t have a vacuum where people can get an unfair advantage,” he said.

According to the PS, the new tax system would be in line with goals spelt out in Vision 2030 as well as ensure it is conducive for investment that spurs economic growth.

“Tax is a good framework through which we are able to promote development, but at the same time we must ensure it doesn’t stifle investment,” he said.

During the last Prime Minister’s Round Table with the private sector, Finance Minister Uhuru Kenyatta said Treasury had undertaken to overhaul Kenya’s tax system by the next financial year, following intense lobbying.
Mr Kinyua said they expect to clear tax refund arrears owed to Kenyans by the second half of the current financial year.

He said they would also consider increasing the Kenya Revenue Authority’s budgetary allocations to help it fast track its refund obligations as well as ensure all future refunds were paid on time.

Until then, the priority in refunds will go towards leading companies raking in huge amounts of money and spurring economic growth.

“It will depend on what KRA puts down as its projections towards tax refunds and probably work on it from there,” he said.

In the new system, a three-tier system will be introduced to refund taxes according the way different companies and individuals pay their taxes.
Mr Kinyua was speaking on the sidelines of KRA Taxpayers Awards, where President Mwai Kibaki had directed the Ministry of Finance to fast track the process of clearing all tax refunds arrears.

President Kibaki assured Kenyans the Government would continue to prudently allocate and utilize collected revenues to fund projects in prioritized development sectors of the economy.

He affirmed that the Government had prioritized key sectors of the economy among them infrastructure, agriculture, education and health which have a considerable impact on poverty reduction.

“We recognize it is only through better application of tax money for the benefit of all Kenyans that we can enhance the country’s partnership with taxpayers,” he said.
 

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