• Treasury would be required to reveal the names of the taxpayers and the amount of taxes abandoned – or waived.
• While the now-defunct Jubilee administration granted some of the waivers, the situation has remained the same for most beneficiaries.
Image: EZEKIEL AMING'A
The National Treasury will no longer grant tax holidays or any tax exemptions to big corporates at its whims.
A proposed law gives MPs the final say on who benefits from tax waivers granted by the government.
In the new dispensation, the Treasury CS will be required to publish names of companies that have been granted tax waivers.
The Tax Procedures (Amendment) Bill, 2024, seeks to provide that the names would be published every four months.
Treasury, in the notice, would be required to reveal the names of the taxpayers and the amount of taxes abandoned or waived.
MPs, should the law be enacted, would then consider and make a decision on the notice within 21 days of receipt.
The notice by the Treasury CS shall be laid before the National Assembly without unreasonable delay, the state-backed proposed law reads.
“The National Assembly may pass a resolution within 21 days on which it next sits after the notice is so laid,” the bill sponsored by Majority leader Kimani Ichung’wah (Kikuyu MP) reads.
On considering the notice, MPs may vote to approve or annul the reliefs approved by Treasury “and it shall thenceforth be void”.
“This to allow Parliament to check the power of the Cabinet secretary,” Ichung’wah said in the bill’s memorandum of objects and reasons.
Concerns are that while Kenyans are being taxed to the bone, big companies, big money contractors and organisations have been lining up at Treasury for relief.
During a probe by the Finance Committee of the National Assembly in the nascent days of the current Parliament, KRA tabled a report detailing companies that enjoyed the ‘unjustified reliefs’.
While the now-defunct Jubilee administration granted some of the waivers, the situation has remained the same for most beneficiaries.
Kenya Breweries, London Distillers, Huawei Technologies through the Ministry of ICT and Maendeleo Ya Wanawake featured prominently on that list.
NCBA Bank was slapped with a Sh976 million claim in taxes which had however been waived. It challenged the claim in court.
KRA data showed that the firms got reliefs running into hundreds of billions of shillings.
Both customs and domestic taxes reliefs summed up to Sh620 billion for a five-year period.
Treasury waived Sh48.9 billion in Value Added Tax, Sh279.2 billion in customs exemptions and Sh20 billion in domestic excise duty.
Another Sh47.7 billion was in Treasury tax commitments, while Sh7.1 billion was in respect of tax and customs waivers.
In its pleadings before MPs then, KRA said it was not privy to the details of the transactions as exempted by the National Treasury.
KRA reports to the Treasury, a situation that has given the exchequer an upper hand in determining the reliefs.
“This is theft. What is interesting is that Treasury is pressuring KRA to collect and achieve targets but at the same time they are abandoning what these companies have collected from hustlers,” Finance Committee chairman Kuria Kimani said during the probe.
The proposed law intends to cure the quagmire, albeit without blocking the Treasury from granting the reliefs.
KRA commissioner would be empowered to determine that a tax is impossible to collect hence best waived.
Reliefs would also follow where there is “undue difficulty or expense in the recovery of the unpaid tax”.
KRA would also consider where “there is a hardship in relation to the recovery of the unpaid tax and where there is any other reason occasioning the inability to recover the tax.”
“The commissioner shall, where he or she determines that there is doubt or difficulty in recovery of tax, refer the case to the CS for consideration and approval for relief or part or the whole of the tax due from that person,” the bill reads.
The provisions, as are laid down in the existing law, have been argued as prone to abuse, hence the new safeguards.
“The catch is that the reliefs will now have to be published in a gazette notice and the same approved by Parliament,” Ichung’wah said.
The bill also seeks to extend the 2023-24 Tax Amnesty Programme to June 2025. Treasury CS John Mbadi recently called for the extension.
KRA data showed that 2.62 million taxpayers took advantage of the amnesty and paid Sh43.9 billion.
“The Bill proposes to amend section 37E of the Tax Procedures Act to extend the tax amnesty which lapsed on June 30. This is intended to allow more taxpayers to benefit from the amnesty and for the government to continue collecting uncollected taxes,” the bill reads.
Treasury, in a statement by Prime Cabinet Secretary Musalia Mudavadi (while before MPs recently), said it aims to collect Sh30 billion.
All the same, the proposed law exonerates the Treasury CS from any reprisals that may arise from the approvals nullified by MPs.
The computation of the period for filing objections to KRA Commissioner General will now exclude weekend and public holidays.
“In computing the period for lodgement of objections to the commissioner, under section 51, 52, 53 and 54 (of the Act), Saturday, Sunday or public holidays shall be excluded,” the bill reads in part.
In the past couple of months, MPs have intensified a probe into tax exemptions running into billions of shillings, which they say were granted to Blue Nile Rolling Mills despite the firm ‘not meeting’ the threshold.