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{
    "id": 1438672,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1438672/?format=api",
    "text_counter": 160,
    "type": "speech",
    "speaker_name": "Prof. Njuguna Ndung’u",
    "speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
    "speaker": null,
    "content": "In order to promote and protect the textile and apparel sector, which is one of the nine Bottom-up Economic Transformation Agenda (BETA) value chains prioritised in this Budget, Kenya was allowed to apply a rate of 25 per cent on selected fabric products with corresponding specific duty rates in order to curb under-valuation and under-invoicing of imported products. Further, to ensure competitiveness of textile products that are produced locally in sufficient quantities, Kenya was granted a stay of application and will apply a higher duty of 35 per cent. In order to reduce production cost of animal feeds, Kenya was allowed to extend importation of inputs for manufacturers of animal feeds duty-free under the East African Community Duty-Remission Scheme. Leather and leather products are one of the value chains under Bottom-up Economic Transformation Agenda (BETA). Kenya has sufficient supply of hides and skins to meet the demand from local manufacturers of leather and leather products. In order to promote this industry and enhance incomes of our pastoral farmers, the ministers agreed to retain a stay of application of duty import on imported leather bags at 35 per cent for Kenya. Hon. Speaker, I have just highlighted a few of the customs measures agreed by East African Community Ministers of Finance. The complete list will be gazetted by the East African Community Secretariat and will become effective starting 1st July 2024. Let me now turn to the Finance Bill, Hon. Speaker. Allow me to highlight the tax policy measures that are proposed in the Finance Bill 2024. I will begin with the proposed amendments to the Income Tax Act, followed by Value Added Tax, Excise Duty Act, Tax Procedures Act and Miscellaneous Fees and Levies Act. Let me start with amendments to the Income Tax Act. Currently, retirement benefits are subjected to tax. This taxation ceases at the age of 65 years. In order to support the retired employees, I propose to amend the Income Tax Act to exempt all retirement benefits paid from the Registered Pension Fund, Registered Provident Fund, Registered Individual Retirement Fund, National Social Security Fund and the Public Pension Scheme upon attainment of the retirement age. For the individuals who take up early retirement, this exemption will only apply if the individual has contributed to the pension scheme for a period of 20 years from the date of registration as a member. In addition, the annual limit of pension contribution that is exempt from tax is 30 per cent of the individual income or Ksh240,000, whichever is lower. Considering that this limit has not been revised since 2005, and to encourage savings for social security after retirement, I propose to increase this limit to Ksh360,000 per annum. Further, I propose to allow deduction contribution to a post-retirement medical fund subject to a limit of Kenya Shillings 10,000 per month. This will promote savings for post- retirement health care needs. Currently, the threshold above which withholding tax applies on payments for management fees, professional fees, training fees and contractual fees is Ksh24,000 per month. I propose to amend the Income Tax Act to remove this threshold since it creates a room for tax planning and is a challenge to tax administration. Despite the Income Tax Act providing a corporate tax rate of 30 per cent, some taxpayers pay tax at an effective rate of less than 15 per cent. This is due to vigorous tax planning and tax incentives provided under the Act. To prevent this practice, I propose to amend the Income Tax Act to introduce a minimum top-up tax payable by a multinational group with a consolidated annual turnover of €750 million whose effective corporate tax rate is below 15 per cent. The spectrum of license fees paid by telecommunication operators are currently not tax deductible, thus creating unfairness in the tax system. In this regard, I propose to amend the Income Tax Act to allow telecommunications network operators to deduct the spectrum licenses fees over a period of 10 years. 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."
}