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{
    "id": 1252710,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1252710/?format=api",
    "text_counter": 118,
    "type": "speech",
    "speaker_name": "Molo, UDA",
    "speaker_title": "Hon. Kuria Kimani",
    "speaker": null,
    "content": "I would like to refer Members to Page 240 of the Bill, Clause 30, Section 9 and read it out verbatim as follows: “Where a bona fide owner of taxable supplies, who has deducted input tax under subsection (1), is compensated for the loss of the taxable supplies, the compensation shall be treated as a taxable supply and – (a) If the compensation includes value added tax, the compensation shall be declared and the value added tax thereon remitted to the Commissioner; or (b) If the compensation does not include value added tax, the compensation shall be declared and subjected to value added tax and the tax remitted to the Commissioner.” Key words here are “taxable supply”. I want to ask Members of this House and members of the public some questions. Is insurance compensation for your leg a taxable supply? Is a compensation of your car when you get involved in an accident a taxable supply? When items in your homestead get burnt because of a fire, is that a taxable supply? Perhaps to get a little technical, what this clause purports to mean is where businesses hold goods that are vatable, then they would have paid input tax on those particular items. If they get compensated plus the VAT that they are asking for a refund, and then they go ahead and charge output VAT on those particular goods, then it would have been deemed that they received that compensation for VAT twice. This double VAT refund is what this clause was trying to cure, and that is what is contained in the Bill. Hon. Speaker, I would like to draw your attention to our tax system in Kenya. Our tax revenue as a share of our Gross Domestic Product (GDP) has remained consistently at approximately 15 per cent. This stagnation is a cause for concern to the Departmental Committee on Finance and National Planning and these are some of the issues that this particular Bill wanted to address. In comparison with several African countries, Botswana’s tax revenue per GDP is at 24 per cent, while that of Mauritius is at 18 per cent. That of Zambia is at 17 per cent. Ours has remained consistent at 13 per cent as of 2021. These countries have managed to achieve higher tax revenue collection rates. The disparity highlights a need for us to reassess our tax policy and explore more effective ways of enhancing revenue mobilisation. I would like to talk about our economy for the last past decade. We have witnessed an evolution in our economy with emergence of employment opportunities in the digital market space. Additionally, a majority of jobs have been created during this period that were and have been in the informal sector, employing approximately 80 per cent or 18 million of Kenyans in 2021. The Finance Bill of 2023 has several tax proposals that will enable the country to increase its tax base, essentially increasing its revenues. The Departmental Committee on Finance and National Planning carried out public participation and deliberated on the matters which informed the several decisions. For instance, Clause 2, which deals with the definition of terms, defines “winnings” in the betting sector. It is something that we have addressed and tried to tighten up so that it does not lead to loss of revenues to the Government of Kenya and also it does not crowd out potential businesses to leave and set base outside this country. Clause 5 of the Bill suggests imposition of taxes on club entrances and subscription fees for employees. However, if it is implemented, this would result in double taxation as both the employee and the employer would be taxed on these fees. In response to this concern, the Departmental Committee on Finance and National Planning made changes to the clause allowing that the taxation be applied only on the employers’ income instead. Clause 10 of the proposed legislation introduced a new tax called the Digital Asset Tax, specifically targeting taxation of profits generated from digital assets such as cryptocurrencies 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."
}