Why Govt Proposes to Wait 5 Years to Review Tax Laws

[ad_1]

The National Treasury, in the recently drafted National Tax Policy announced plans to move towards reviewing Kenyan tax laws every five years.

The Policy, published on Thursday, May 30, sets out broad guidelines on taxation and other related matters.

In the policy, a comprehensive review of tax laws will be conducted every five years to address the unpredictability of tax rates across the sector that has caused fear among investors.

During the review, stakeholders will be consulted to assess the impact of the proposed changes.

Treasury CS Njuguna Ndung’u speaks during the Council of Finance & Economic Affairs & Pre-Budget Consultation in Arusha.

Photo

National Treasury

“The Policy aims at providing a framework to guide, to a reasonable degree, predictable and sustainable rates of tax as well as widening of the tax base,” read part of the policy.

“To achieve these objectives, the Government will undertake a comprehensive review of tax laws every five years to align with other Government policies and international best practices.”

In the event of a natural disaster, pandemic or emergency, the government can review the tax base when it occurs to enable the government to address the financial impacts of the disaster.

“The existing tax legislation and administration will be reformed to align with this Policy in a phased manner.”

What Does this Mean for the Finance Bill?

The Finance Bill is a document proposed by the National Treasury that outlines changes to tax laws such as modifications to existing laws and proposals for new taxes. It’s presented to Parliament annually and undergoes a procedure before it becomes law every July 1.

Kenyans.co.ke reached out to Churchill Ogutu, Economist at IC Group and policy expert, who gave a breakdown of what will happen to the Finance Bill should the National Tax Policy take effect.

“The proposals seen within the Finance Bills are coming up with amendments on existing Tax Acts, It could be Income Tax Act, VAT, Excise Duty and other tax-related miscellaneous fees and levies,” he explained.

“What the tax policy is suggesting that the majority of underlying tax laws be revised every five years but the Finance Bill could be used to handle minor amendments.”

“For instance VAT Act came in place in 2013, the Excise Duty Act came in 2015 but the Income Tax Act is still cap 470 from the 1990s but the Tax Policy will be a revision of the tax laws. We can have the usual Finance Bill to amend as when it’s necessary.”

Ogutu, however, noted that taxpayers should take a keen interest in whether the government will implement the tax policy.

“We are good on coming up with policies and strategies to tick the right boxes but (when it comes to) the actual implementation, there’s a big disconnect,” Ogutu noted.

President William Ruto (seated) signs Finance Bill 2023 into Law at State House, Nairobi on Monday, June 26, 2023.

PCS



[ad_2]

Leave a Comment

Your email address will not be published. Required fields are marked *

×

Hello!

Click one of our contacts below to chat on WhatsApp

×