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{
    "id": 1003278,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1003278/?format=api",
    "text_counter": 362,
    "type": "speech",
    "speaker_name": "Kipipiri, JP",
    "speaker_title": "Hon. Amos Kimunya",
    "speaker": {
        "id": 174,
        "legal_name": "Amos Muhinga Kimunya",
        "slug": "amos-kimunya"
    },
    "content": "they do not need to rock the boat. They are taxing unga, pensioners and Corporate Social Responsibility (CSR) and the rationale has not changed. The message that we need to send to the National Treasury is that, as much as they need money, they should collect that money in a way that does not promote inequity. When I look at Clause 33 - I know the Committee has commented on their Report - there is intention to change the agency fee that is payable to KRA by up to 2 per cent. That makes it a minimum of 2 per cent. The effect of that is that wherever KRA collects, they will be given 2 per cent as a minimum. That is at the national level. When it comes to the counties, it is worded “a maximum of”. So, of course there is an inconsistency between the two rates. For the county governments it is up to a maximum of 2 per cent and the national Government is a minimum of 2 per cent. I have had this discussion with KRA for a long time from the time I was in the Treasury. The issue was if they can collect more money, they will be able to finance their budget from a certain amount. They should not be dependent on the quantum of the money they generate. They have a fixed budget for salaries and other things. What we want to avoid – we have seen this happen especially in the public sector – is that, immediately you give a sector a minimum of a certain percentage, it ends up accumulating all that money and because free cash flows are available, they end up with pet projects that are not tied to the core mandate. We have seen the push and pull between the Central Bank and the Treasury. That, Central Bank is holding a lot money, can they surrender it to the National Treasury? They justify that by saying they want to do some projects. That is the danger. I want to persuade the Chair that, even as we look for money, let us rethink whether we want to allow KRA to have a minimum amount that they would keep or continue pegging by not allowing them to borrow more than 2 per cent. If we allow KRA to have a minimum amount, that will allow them to increase their volumes. When you give them a minimum of 2 per cent and they satisfy their budget, why will they need to go out to increase the overall tax available for the nation? We could be shooting ourselves in the foot by guaranteeing them a safety net. They will not have to do anything more. But by pegging it on “not more than” it will mean they need to work harder to collect revenue, so that they are given more agency fees. The other thing I want to urge the Committee – I believe Hon. Makali has mentioned it and one other Member – is the issue of the minimum tax. It is good to say we need everyone to pay tax, but we already have a taxation regime that allows companies to accumulate tax loses and recoup them against future profits for up to 10 years. So there are companies that are probably in their fourth, fifth or sixth year. If you say from tomorrow everyone must pay minimum tax, you will end up with two tax regimes that are total variants. Is this introduction of minimum tax administratively manageable or are we going to have cases after cases? If a company has accumulated tax losses of a certain amount and it has started making profit, it is supposed to recoup. All of a sudden, you are saying it must pay 1 per cent as minimum tax. You might as well treat them like the other companies within the turnover tax bracket of the first Ksh15 million. It is something that needs to be looked at before implementation to see whether it will lead to more administrative hiccups or whether it will actually meet the intended objectives. I also want to reemphasise something. I have heard people saying this digital tax will hurt the youth and start-ups. If my reading of the Bill is correct—and from the Committee report I believe we are on the same page—this tax is meant for non-resident companies, not for Kenyan companies. Kenyan companies will pay the 1.5 per cent turnover tax, but they will have the opportunity of recouping that tax on their final tax bill. If you are already paying tax, it does not matter. It is not additional tax. It is just part of the tax but it will be payable at the transactional The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}