Kenyans will now start paying taxes as soon as every financial year kicks off in order to meet Kenya Revenue Authority’s set targets on revenue collection if a proposed law is passed.
The bill which was proposed by the Kenyan legislators seeks to tackle delays of revenue collection as they negatively affect the set targets at the end of every financial year.
The new Finance bill will require companies and individuals to start paying their taxes as early as July 1 every financial year, thus helping the taxman achieve a commendable collection and help boost budget allocation.
Legislators argue that late onset of collection of taxes has been one the many reasons why the taxman has been missing out on the set targets and collecting low revenue, a situation that has forced the National Treasury to review its budget every now and again.
According to the Business Laws (Amendment) Bill, 2019, the Finance Bill is supposed to be tabled in parliament before April 30 so that it can be approved by the President as early as June 30 as opposed to the ordinary way where it would take months for it to be approved.
“The National Assembly shall consider and pass the Finance Bill, with or without amendments, in time for it to be assented to by 30th June each year,” reads the Bill.
The new bill tabled by the National Assembly Majority leader Aden Duale seeks to remove the many processes that involve the parliament, the National Treasury and the President which have led to delay in implementation of tax policies in the past years.
A bad situation happened in 2018 where the court stopped KRA from collecting taxes on bottled water, kerosene and other items until a proposed bill became law.
Tax collection on bottled water and kerosene was thus delayed since the bill had to go through the parliamentary legislative process laid out in the Constitution for approval and adoption by Parliament, and assent by President before it became an Act.
In recent years, Kenya has experienced a decline in tax collection which has affected the budget allocation adversely. A World Bank report stated that taxes from sectors that have been contributing highly to the country’s GDP have steadily declined.
For the 2019|2020 financial year, the Government targets to collect 1.3 trillion shillings in revenue. This was a target set by the former CS Henry Rotich.
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