Treasury Cabinet Secretary Ukur Yatani has moved to arm the taxman with a new weapon to help it get difficult taxpayers to pay their fair share of taxes.
In the Finance Bill 2021, Mr Yatani wants to empower the Kenya Revenue Authority (KRA) to seek help from other authorities for tax collection. One of the immediate targets of this proposal is to deal with the headache of collecting the controversial Digital Service Tax.
This means that KRA can enlist the services of regulators and other government agencies to deny a non-compliant company a licence, or exert any appropriate measures to ensure the entity pays tax.
To boost universal access to health, Mr Yatani is proposing to introduce a National Hospital Insurance Fund (NHIF) insurance relief. Also, the rebates for internships will be extended beyond universities to also cover technical and vocational education training institutions.
There will also be no room for group Value Added Tax (VAT) registrations, should the new tax Bill get Parliament’s nod.
"Group entities will not be able to register for VAT as provision enabling this has been deleted," said Mr Samuel Njoroge, a tax expert at Taxwise Africa Consulting LLP.
Businesses that hire or lease passenger motor vehicles will also now have to pay the 16 per cent VAT. In the past, only new vehicles attracted the tax.
The Bill has also lined up several proposals to change the Tax Procedures Act, such as the deletion of the withholding VAT exemption provision. This means that even if a company can demonstrate that it will be in a refundable position for the next 24 months, no taxpayer will be exempted from withholding VAT.
Criminal tax cases
Tax experts say this provision will increase the VAT refunds nightmare for anyone in a refundable position, such as manufacturers and flower companies.
Also, if the Bill is approved by Parliament, civil and criminal tax cases will be allowed to proceed concurrently, unlike the current scenario where one case has to be completed before the other commences, with the legal dispute taking a long time, after which the tax can be paid.The fact that another case is ongoing will no longer be a basis for a stay, prohibition or any delay by another court. This was seen in the Keroche and African Spirits cases.The KRA commissioner general will also be required to give a report to the Treasury boss outlining any tax penalties and interest abandoned under refrain […]