The minimum capital requirement for commercial banks will remain at KSh 1 billion after MPs rejected the proposal by the Treasury CS, Henry Rotich aimed at raising it to KSh 5 billion within three years.
The Treasury in its submission had argued that having fewer and better capitalized banks would bring more competition into the financial sector and hence bringing the overall cost of loans down.
If the proposal had sailed through then small banks would have been faced off the financial market not forgetting that these small banks are necessary in the economy as they serve niche clients that contribute to the overall economic growth.
If the bill had been passed as proposed, this would have meant that lending institutions would have had to either raise additional core capital or enter into mergers.
The Finance Bill 2015, which amends the law relating to various taxes and duties, hands farmers and manufacturers of pharmaceutical products, vaccines and medicines, among others, huge tax exemptions.
Also benefiting are employers or firms who intern university graduates and the film industry which will benefit from tax rebates and exemptions for goods imported or purchased by local film producers or film agents respectively.
Nairobi Securities Exchange also got a reprieve after the capital gains tax of five percent that had been introduced in 2014 was voted to be scraped by MPs so that they’ll only have to part with the 0.3 percent transaction levy.
Companies listing their shares through introduction on a securities exchange licensed by the Capital Markets Authority will receive a 25 per cent tax rebate for five years starting after a year from the date of listing.
Insurance firms will be required to double their paid up capital from Sh300 million to Sh 600 million. Also affected are winnings payable by bookmakers to punters (players) which will now attract a 7.5 per cent tax.