Connect with us

Hi, what are you looking for?


Kenya budget ambitious, say experts

NAIROBI, Kenya, Jun 11- Ernst and Young has described the Sh997 billion-budget as “too ambitious” for the country, which will force it to rely on external borrowing leading to an increase in foreign debt.

Tax Consultant Grace Mulinge said Kenya did not raise enough revenue during the past financial year to adequately sustain expenses and could have to source alternative ways to meet her needs.

Ms Mulinge warned that the upcoming constitutional review processes would constrain the budget even further.

“It’s a very great challenge because the economy was directly and indirectly affected by the crunch. In addition, the budget is financed by taxation and evidently the revenue authority did not meet their targets which means that if the country fails to raise the money, the government will have to borrow heavily which is a huge cost,” she said.

She further explained that domestic borrowing through sale of bonds and intensifying tax collection efforts as proposed by Finance Minister Uhuru Kenyatta would be the best option for Kenya. 

“Floating bonds in the local market is cheaper than foreign funding and we hope that we will be able to actually meet our tax targets to be able to at least fund a large portion of the budget if not the full budget,” she said.

Ms Mulinge also explained that transfer pricing policies proposed by the Finance Minister would help ensure that profits obtained by multinational companies with related companies in Kenya did not transfer their profits to their related companies in other jurisdictions.

She also said that it would be prudent for the Kenya Revenue Authority (KRA) to file tax refunds as directed by the minister.  She noted that failure by the Kenya Revenue Authority to meet VAT tax refund deadlines was hampering the movement of cash in and out of business entities.

“VAT refunds which have caused a tremendous cash flow problem will now be payable within 120 days. Any refunds which were audited by the revenue authority and were payable by end of June 2010 will be payable by July 31st and since the revenue authority demands that we pay our taxes on time we expect that the revenue authority will meet this refunds within the due dates,” she said.  

Advertisement. Scroll to continue reading.

She added that Kenyans in the Diaspora would be required to show proof of payment of taxes in their countries of residence. Those in countries that have a lower tax regime will have to meet the tax differential by remitting to KRA.

“The provision has been in the Act but majority of Kenyans don’t seem to be aware. So for that reason the minister has proposed a tax amnesty so that any Kenyan who volunteers to declare their income within the next year will get a tax amnesty and will not be charged penalties or interest on any outstanding amounts,” she said.

The agricultural sector, home and property owners, airline industries as well as Small and Medium sized Enterprises have been most favoured by this year’s budget.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...