NAIROBI, Kenya, Jul 14 – Tax incentives are among the key issues that will be looked at in the overhaul of income tax that will be done by the end of the 2016/2017 financial year.
According to the Kenya Revenue Authority, the current tax incentives have not met their objectives and have seen the Authority lose revenue.
KRA Deputy Commissioner Strategy Innovation and Risk Management Maurice Ojee says investors do not see tax exemptions as an important incentive to investing in the country as their key importance is return on investments.
“The tax exemptions on the Export Processing Zones have not translated to anything meaningful, we have seen firms who have been given these incentives for a certain period transform their business into other institutions to avoid paying taxes,” he stated.
He says the Authority is working on a new structure that could see the existing tax bands widened to reflect the current income trends and cost of living levels.
“We also need to harmonise our incentives with the East African Community states. We are asking ourselves how has these incentives impacted on our economic growth, how have they impacted our revenue,” he stated.
KRA will also review tax exemptions on persons with disabilities as well as churches and trusts.
“We have seen churches venturing into commercial activities, they need to be on the tax bracket,” he added.
He says the current income tax is complicated and confuses the tax payer hence the need to make it clear and easy to comprehend to foster tax compliance.
Kenya hopes to collect more revenue in this financial year with a target of Sh1.49 trillion to finance the Sh2.3 trillion budget.
This comes even as the Kenya Revenue Authority (KRA) missed its target for the nine months ending March this year.
KRA collected Sh842.5 billion against a target of Sh911.5 billion with the Commissioner General John Njiraini attributing it to slow growth in customs taxes especially during the first six months of the financial year ending December 2015.
The collection was however a revenue growth of 11.7 percent compared to the previous year.