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The Finance Bill, 2020 was published on 5 May 2020 (the Bill) to make amendments to a raft of laws in Kenya, including the Income Tax Act, the Value Added Tax Act, of 2013, the Tax Procedures Act, of 2015, the Miscellaneous Fees and Levies Act, 2016 and the Excise Duty Act, 2015 among others.
All the proposed amendments relating to income tax have an effective date of 1 January 2021 while most of the other amendments will come into force on the date of assent, which is expected to be prior to 1 July 2020. The Bill is expected to be passed into law in the course of June and the National Assembly has requested stakeholders and the general public to submit comments on the Bill by 21 May 2020.
The proposals in the Bill can be seen to target an increased tax base with the introduction of minimum tax and the digital service tax as well as disallowing certain categories of expenses in the computation of taxable income. We also note that a vast number of changes which were earlier proposed by the Tax Laws (Amendment) Bill, 2020 but were eventually deleted by the Tax Laws (Amendment) Act, 2020 have been proposed a second time by the Bill. Following the changes introduced by the Tax Laws (Amendment) Act, 2020, we continue to see the systematic removal of tax exemptions and incentives that were available to specific sectors such as the energy sector.
While the Parliamentary Standing Orders do not permit the re-introduction of a motion in Parliament before the expiry of 6 months from the date when such motion had been debated and either passed or rejected by Parliament, the Speaker of the National Assembly has the discretion to allow such motions to be debated. Having said that, since Parliament debated the Tax Laws (Amendment) Act, 2020 at length, we hope that the Speaker will not permit the re-introduction of items which were debated and rejected by Parliament less than a month ago.
We have put together a summary of the key proposed amendments in the Bill as well as their potential impact to business. Click here to read the full article.
Should you have any questions regarding the information in this legal alert or any other tax matters, please do not hesitate to contact Daniel Ngumy or Kenneth Njuguna.