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{
    "id": 1254227,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1254227/?format=api",
    "text_counter": 178,
    "type": "speech",
    "speaker_name": "Prof. Njuguna Ndung’u",
    "speaker_title": "The Cabinet Secretary, National Treasury and Economic Planning",
    "speaker": null,
    "content": "In addition, Hon. Speaker, I propose to the National Assembly to exempt the investment income earned by Post-Retirement Medical Fund from Income Tax. This will reduce pressure on Government expenditure on medical care and accord retirees access to dignified healthcare. Hon. Speaker, we have noted that family members have been using an exemption from Capital Gain Tax on transfers of property between related persons as an avenue to reduce their tax liability. To remedy the situation, I propose to the National Assembly to change the base of Capital Gain Tax from the sale of the property to the original cost before the transfer to the family member in instances where a property is transferred to a third party within a period of less than five years. Hon. Speaker, despite the advantages brought about by digital platforms, the transactions usually conducted under the platforms are not in the tax net. I propose to the National Assembly to introduce a Digital Asset Tax at the rate of 3 per cent on the value of the digital asset transferred or exchanged. Hon. Speaker, to further create equity and fairness, I propose to the National Assembly to introduce Withholding Tax at the rate of 5 per cent of the gross payment with respect to digital content monetisation. This will apply to incomes generated through media and digital platforms. Hon. Speaker, currently, non-residents pay Withholding Tax on payments with respect to sales promotion, marketing and advertising services. To harmonise taxation treatment for residents and non-residents and ensure equity, I propose to the National Assembly to introduce Withholding Tax on the same services to residents at the same rate of 5 per cent of the gross amount. Hon. Speaker, resident companies currently pay 30 per cent Corporate Tax while non- residents with permanent establishments pay 37.5 per cent on their gains or profit. This creates an impression that Kenya discriminates between residents and non-residents. To harmonise taxation treatment for residents and non-resident companies, I propose to the National Assembly to reduce the Corporate Tax rate for non-residents from 37.5 per cent to 30 per cent. Further, to ensure a level playing field, I propose to the National Assembly to introduce a tax on repatriated profits at a rate of 15 per cent, equal to the rate charged on dividends paid to non-residents. Hon. Speaker, businesses deduct the diminution value of implements, utensils or similar articles used in the production process over a period of three years in the determination of taxable profits. To increase working capital for business, I propose to the National Assembly to amend the Income Tax Act to provide for a 100 per cent investment deduction of the value of those items in the first year of use. Hon. Speaker, in 2020, the Government implemented various measures to cushion businesses from the adverse effects of the COVID-19 Pandemic; this included providing tax incentives during the period. With the easing of the COVID-19 Pandemic and the recovery of businesses, I propose to the National Assembly to lower the upper threshold for Turnover Tax from Ksh50 million to Ksh25 million and retain the lower threshold at Ksh1 million. In addition, I propose to the National Assembly that the Turnover Tax rate for this sector be at 3 per cent. Hon. Speaker, last year, the Government provided various tax incentives to promote local manufacturing of human vaccines. To further support those manufacturers, I propose to the National Assembly to exempt the manufacturers in this sector from Withholding Tax on interest and royalties paid to non-residents. Hon. Speaker, the current PAYE tax structure has three rates and bands applicable to 3.3 million employees. The bands are as follows: 10 per cent is applied to incomes up 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."
}