Kenya would soon have the highest corporate tax in East Africa if the proposed changes by the National Treasury will be adopted.
The Treasury has proposed a 35 percent tax for companies on an annual income of more than 500 million shillings.
If the new proposals will be approved to become law, Kenya will have the highest corporate tax in the region where most countries have it at 30 percent.
Kenya has struggled with high budget deficits over the last few years. Introducing a new corporate tax bracket may be a way to raise much-needed revenue to plug the gap.
According to a draft bill published on its website, the Treasury said it had reviewed the income tax act and proposed changes to “make it productive” and “supportive to the Big Four Agenda” and economic growth.
President Uhuru Kenyatta’s “Big Four Agenda” policy is aimed at boosting economic growth through spending, improving food security and rolling out universal health care, supporting manufacturing, and building affordable housing.
“It’s rare to see corporate (tax) being graduated. Usually, it’s a flat tax,” said Titus Mukora, a Nairobi-based partner at auditing firm PricewaterhouseCoopers.
He said that as he understood it, income above 500 million shillings would be subjected to the new tax, and anything lower than that would remain at 30 percent.