Treasury yet to present bill on Uhuru tax relief measures measures
Some of the tax relief measures announced by President Uhuru Kenyatta last week may not take effect because the National Treasury has not presented a bill to the National Assembly to amend the Finance Act.
While unveiling an economic stimulus package to shield the economy from effects of the coronavirus pandemic last week, President Kenyatta outlined measures including giving employees earning up to Sh24,000, a total tax relief.
This means if you earn Sh24,000 or less, you will get a full salary without the Pay As You Earn (PAYE) deductions from April 1.
Those earning more than this will pay a maximum of 25 per cent, down from the current 30 per cent.
However, by yesterday, the National Treasury had not presented the Bills to the National Assembly as required by law.
“My office is yet to receive the Bills from the National Treasury. It is a requirement in law and with the deadline being tomorrow (today) we will have to wait,” said Clerk of the National Assembly Michael Sialai.
And Speaker Justin Muturi said the National Assembly is ready to process Bills that would help the National Treasury implement tax reliefs announced by the President to cushion Kenyans against effects of the pandemic.
And yesterday, Leader of Majority Aden Duale wrote to the Speaker of the National Assembly requesting a Special Sitting of the House on Wednesday, April 8.
Duale wants Parliament to, among other issues, establish Covid-19 Emergency Fund Regulations, consider all stages of the Tax Laws (Amendment) Bill 2020 containing part of legislative measures to address the taxation regime due to the coronavirus pandemic which has affected all sectors of the economy.
While announcing the measures, the President directed the Treasury to cause immediate reduction of Value Added Tax (VAT) from 16 per cent to 14 per cent, effective today.
“The legislative proposal must emanate from the Executive since it is the President who directed on tax measures and National Treasury is to move to Parliament so they have to prepare a Bill and once we receive it we can move ahead.
The communication from Treasury on the proposed interventions is yet to be brought to us,” Muturi said last week.
For purposes of preparing Bills, Muturi explained that there was space for committees to give their input but their decisions must have full authorisation of a House sitting.
“Committees cannot be making decisions with such monumental impact as the ones the President proposed, it is the Houses that are mandated to make the decisions while committees make recommendations,” the Speaker said.
A tax analyst from Genghis Capital, Churchill Ogutu, said the fact that the Treasury has not communicated to Parliament means the changes proposed by the President would not take effect.
“The law requires that the Bills from the Treasury be presented to the Finance and Planning Committee for consideration after which a report will be prepared and tabled before the plenary for adoption,” said Ogutu.
He, however, said that PAYE deductions which are also expected to take effect today, might not be affected since the deductions are effected at the end of the month, meaning Parliament will have sat by the then.
“Kenyans will, however, have to wait a little bit longer to enjoy the VAT reductions of commodities,” Ogutu added.
National Assembly Budget and Appropriation Committee chairman Kimani Ichung’wa said he had not received summons to attend a sitting.
According to Ichung’wa the fact that Treasury CS Ukur Yattani has already issued a legal notice on the VAT change from 16 per cent to 14 per cent, since the VAT Act allows him to do that.
“Therefore, that particular one becomes effective immediately unless it is reversed within the stipulated time.
As for the income tax measures, those will have to wait for the Treasury to submit the same for approval by Parliament, the MP said.
In his stimulus plan, President Kenyatta also gave companies something to smile about after he cut corporation tax from 30 per cent to 25 per cent.
For the micro, small and medium enterprises (MSMEs), Uhuru proposed a reduction of the controversial Turnover Tax (ToT), also known as the Patriotism tax, from the current three per cent to one per cent.
This means that small businesses will now pay one shilling for every Sh100 they make in gross sales.
He also asked the National Treasury to give the elderly, orphans and other vulnerable members of society an additional Sh10 billion through cash transfers to cushion them from the impact of the virus.
Distressed business enterprises and individuals will now not have to worry about being listed with Credit Reference Bureaus (CRB) after the President announced a temporary suspension of listing of any person, MSME and corporate entity whose loan account falls overdue or is in arrears, with effect from April 1.
All ministries and departments have also been ordered to pay at least Sh13 billion of the verified pending bills in the next three weeks.
President Kenyatta also urged companies in the private sector to pay their suppliers in three weeks.
The Kenya Revenue Authority (KRA) has also been asked to expedite payment of all verified VAT refund claims amounting to Sh10 billion within three weeks.