President William Ruto’s latest move to overhaul Kenya’s tax relief framework is stirring controversy and scepticism. The proposed Tax Procedures (Amendment) Bill 2024 aims to restore powers previously revoked by the Finance Act 2023, which was later nullified by the courts.
The draft bill, which has been met with a mix of support and apprehension, seeks to reintroduce significant changes to how tax relief is handled in the country.
At the heart of this proposed legislation is the new Section 37F, which would amend the Tax Procedures Act. This section introduces a revised approach to tax relief, aiming to address issues related to unpaid taxes.
According to the draft bill, tax relief could be granted if the Commissioner determines that recovering unpaid taxes is either impossible, overly burdensome, or inequitable.
This would empower the Cabinet Secretary for National Treasury to approve relief for part or all of the taxes owed or direct the Kenya Revenue Authority (KRA) to take appropriate actions.
The new proposal stipulates that the National Treasury Cabinet Secretary must publish a notice in the Gazette at least three times a year, detailing the names of taxpayers who have received relief, the reasons for this relief, and the amount of taxes abandoned. This is a shift from the previous requirement of twice-yearly notices.
Furthermore, the bill mandates that these notices be laid before the National Assembly, which will have the power to either approve or annul them within 21 days of the notice being laid.
Critics of the bill argue that these changes could open the door to potential misuse of tax relief provisions. The debate is particularly heated given past controversies involving tax relief decisions.
For instance, in 2022, there was significant backlash when the tax authority withdrew a Ksh2.2 billion tax evasion suit against businesswoman Mary Wambui Mungai, who was later appointed by President Ruto as chairperson of the Communications Authority of Kenya. This move was widely seen as indicative of undue influence from the highest levels of government.
The proposal comes in the wake of a March 2023 scandal, where the revenue collector was scrutinised over Ksh20,356,398,799 worth of tax revenue abandoned between January 2018 and February 2023.
Supporters of the bill argue that the new provisions will enhance transparency by increasing the frequency of public disclosures and involving the National Assembly in the approval process. However, sceptics worry that the increased discretion granted to the Cabinet Secretary and the potential for manipulation could undermine public trust.
Source: kENYANS.CO.KE