On June 26, President William Ruto declined to assent to the much-contested Finance Bill 2024, and in an unprecedented move directed that the bill be withdrawn in its entirety through deletion of all 69 clauses it contained.
National Assembly Speaker Moses Wetangula has since transmitted the President’s directive to the Assembly’s Finance and Planning Committee, which is expected to report back to the House upon resumption on July 23.
It is my prayer that among the proposals to be tabled by the Committee upon resumption will be the consideration of a Tax Laws Amendment Bill designed to salvage the progressive proposals that were contained in Finance Bill 2024 yet ended up being a victim of the withdrawal of the Bill in entirety.
How do we salvage the proposal to extend the just ended Tax Amnesty Programme from the June 30, 2024 sunset date to the March 31, 2025 that was proposed in Finance Bill 2024 via amendment to Section 37E of the Tax Procedures Act?
The extension of the Tax Amnesty Programme would be of particular benefit to Kenyans given that according to the National Assembly Finance and Planning Committee as at June 25, 2024, the amnesty programme had mobilised Sh31 billion against the targeted Sh51 billion, translating to a performance rate of just 60.8 percent.
How do we salvage the proposal to increase the quantum of allowable pension deduction from Sh20,000 to Sh30,000 and in so doing provide the much-needed boost for workers disposable incomes even as they create a safety net for their sunset years? This was a very welcome proposal in Finance Bill 2024.
Still on pensions, how do we salvage the proposal to migrate Kenya’s pensions system from exempt-exempt-tax to exempt-exempt-exempt and in so doing, ensure that when senior citizens finally tap into their accrued pension benefits, they are spared the tax that currently comes with it? Not only was this a proposal in Finance Bill 2024, it is a core pillar of the National Pensions Policy.
How do we salvage the proposal to increase the allowable deduction when contributing to a post-retirement medical scheme from Sh10,000 to Sh15,000 and in so doing, make the prospect of preparing for one’s post-retirement medical expenses a lot more attractive?
This was a very important and much needed proposal in Finance Bill 2024. Data from the Retirement Benefits Authority shows that the average lumpsum payment by pension schemes to a retiree in Kenya is Sh1,956,727. And that the most common uses of this lumpsum is paying off loans, medical bills and children’s school fees. That aspect of using one’s pension lumpsum to settle medical bills needs to be addressed in this country.
How do we salvage the proposal to amend the tax free per diem rate from the current Sh2,000 per day to five percent of an employee’s gross monthly income? This proposal was extremely welcome since it was designed to create an incentive to have proper accountability around per diem payments in the country.
Another proposal that was contained in Finance Bill 2024 that ought to be salvaged is the one to increase the amount allowable for deductible purposes when it comes to employees’ non-cash benefits from the present Sh36,000 ceiling to Sh48,000. This proposal was designed to provide more headroom for employees to enjoy non-cash benefits from employers without increasing their taxable income.
How do we salvage the plan to introduce Advance Pricing Agreements between taxpayers and the Kenya Revenue Authority (KRA), and in so doing enhance the certainty with which parties engaged in transfer pricing arrangements are dealing with the taxman?
A tax laws amendment bill is not a strange phenomenon in this country. Kenyans will remember that it was through the Tax Laws Amendment Act No.1 of 2020 that the government undertook Covid-19-related tax measures designed to provide a stimulus for the crisis-hit economy.
It is through the Tax Laws (Amendment) Act No.1 of 2020 that the corporate income tax rate for resident companies was revised downward from 30 percent to 25 percent. It was also this Act that provided much needed reprieve for small businesses when it expanded the ceiling for Turnover Tax eligibility from the initial Sh5 million to Sh50 million as well as reducing the Turnover Tax rate from three percent to one percent.
I believe in the prevailing unprecedented environment, just like it did during the unprecedented Covid-19 environment, a Tax Laws Amendment Bill could be used to unlock these gains for Kenyans.
The writer is a business journalist.