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"id": 1079740,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1079740/?format=api",
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"type": "speech",
"speaker_name": "Suba South, ODM",
"speaker_title": "Hon. John Mbadi",
"speaker": {
"id": 110,
"legal_name": "John Mbadi Ng'ong'o",
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"content": "Earn (PAYE), Value Added Tax (VAT), Exercise Duty and even the Tax Procedures and Miscellaneous Tax Laws. You can see very modest adjustments on the tax rates. It means, therefore, that the Government is not looking for new measures to raise revenue. What the Government is proposing is administrative methods of using the current tax rates to raise more resources. The more resources that the Government is looking for in terms of ordinary revenue is Ksh181 billion up from what was projected for the 2020/2021 Financial Year, that is Ksh1,594,000,000 to now the current projection of Ksh1,775,000,000. Hon. Speaker, I want to highlight a few things and support what the Chair did say. On the issue of clear definition of infrastructure bond, we are moving towards funding most of our infrastructure, be it roads, water, sewerage system, et cetera, through issuance of bonds. If that is the case, then we must have and must make the infrastructure bonds more attractive by exempting them from certain categories of taxes. That is exactly what the Government is proposing and I support it fully. As the Chair said, I just want to explain something which probably many Kenyans have not understood on this issue of Digital Service Tax that only non-residents will be paying it. Members may wonder, Kenyans may worry, about what is this non-resident. If you go to Income Tax Act, you will find the definition of residents and non-residents. By the way, there is a complete difference between a resident and a citizen. In fact, you can become a resident by just coming to this country, living for 183 days in a year and you become a resident of this country. So, it is not the same as citizenship. Citizenship is totally different and we know how to acquire the citizenship of this country. If you come and stay here for some time, then you become a resident for tax purposes. So, I want to clearly explain that so that it is understood. Those who are wondering whether they will be required to now pay the Digital Service Tax and they are Kenyans, definitely they will not. Hon. Speaker, the related parties issue is a very contentious issue. I see the Chair explaining it. Many businesspeople have used this provision to avoid tax. By the way tax avoidance is not illegal, it is very legal. So, people look for ways of avoiding tax but it is not moral because they are denying Kenyans taxes that we need for service delivery. Looking at this whole question of related parties especially in terms of interest paid which becomes tax deductible, if I have two companies, as the Chair explained, company X and company Y, company X because it is making huge profits compared to company Y may decide to purport to sell money to company Y which then it would charge high interest and that high interest is not taxable and it is not deducted for tax purposes. To avoid this, we must put a cap so that it is not left for unscrupulous business people who we provide a conducive environment for to do business and after making huge profits, they decide to use the many companies that they own to avoid tax, there will be no legality in law but immorality in terms of being a responsible citizen. The Chair explained what Investment Allowance Deductible is. I do not want to go there. I agree on the issue of the NHIF. If you get to pay insurance premium in the country, we know that insurance premium is deductible. When it comes to NHIF because it is also insurance, it is not. This is discriminatory, and the Government has made the right move to bring this also to those payments that are allowable for tax purposes. I disagree a bit on the issue of reducing the number of employees which employers need to employ for these organizations to qualify for tax relief. To me, ten is a reasonable number because if we lower it too much, it is not going to motivate these companies or institutions to employ. The idea here is to employ more Kenyans, to give more Kenyans opportunity to offer services for some pay. So, if you lower it to five people and say that is enough… We need to 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."
}