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{
    "id": 1438674,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1438674/?format=api",
    "text_counter": 162,
    "type": "speech",
    "speaker_name": "Prof. Njuguna Ndung’u",
    "speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
    "speaker": null,
    "content": "Recognising the importance of tax expenditure in the promotion of investment and addressing welfare challenges in the economy, and in line with the medium-term revenue strategy, I propose to rationalise the VAT tax expenditure as provided for in the VAT Act in form of exemptions and zero rating based on the following criteria: 1. Goods currently exempt be subjected to VAT. 2. Zero rated finished goods and services be exempt from VAT. 3. Zero rating be restricted to goods and taxable services that are meant for export. Based on the above criteria, I have proposed several amendments to the First Schedule of the VAT Act in order to move some goods and services from exempt to vatable status. In addition, I have also proposed amendments to the Second Schedule of the VAT Act so that we can move some of the goods and services from zero rating to either exempt status or vatable. This rationalisation is expected to expand the VAT tax base and create fairness in taxation. Let me turn to amendments in the Excise Duty Act. On the tax measures under excise duty, I propose to change as follows: I propose to change the due date to payment of excise duty on alcoholic beverages from 24 hours to within five working days after removal from the stockroom. The 24-hour time frame has posed administrative challenges as well as cash flow challenges to the taxpayers. To protect local assemblies and create fairness and equity in taxation, I propose an introduction of excise duty on imported, fully built motorcycles at a rate of 10 per cent of the customs value in addition to the specific tax duty rate of Ksh12,952.83 per unit, whichever is higher. Participation in betting, gaming, prize competition and lotteries continues to affect the socio-economic fabric of our society, given their addictive nature. Last year, we raised excise duty on these activities from 7.5 per cent to 12.5 per cent to discourage participation. Despite this increase, participation rate in these activities by Kenyan citizens, especially school-going children and young adults, continues to persist. To further discourage this behavior, I propose to increase the excise duty tax rate to 20 per cent. In line with the research findings commissioned by the National Treasury on the taxation of alcoholic beverages, I propose to review the excise duty structure on wines and beer from specific rates per litre to the rate of Ksh22.50 cents per centilitre of pure alcohol. In other words, we want to start taxing alcohol beverages on the basis of alcohol content. Further, I propose to change excise duty rate on spirits from specific rates per litre to Ksh16 per centilitre of pure alcohol. This new structure of taxation based on alcoholic content does not distort the markets and does not affect the investment decision and it is expected to encourage responsible consumption behaviour of those alcoholic beverages. I also propose to review the excise duty structure on cigarettes in line with the research conducted and advice that has recommended the harmonisation of excise duty rates for cigarettes with and without filters at the rate of Ksh4,100 per mile. This will reduce the incentive for mis-declaration and illicit trade. I propose to increase the excise duty rate from Ksh1,594.50 per kilogram to Ksh2,000 per kilogram on products containing nicotine or nicotine substitutes to address their adverse effects on human health. This excludes those approved medicinal products. Additionally, I propose to increase the excise duty rate on liquid nicotine for electronic cigarettes from Ksh70 per millilitre to Ksh100 per millilitre. To provide fair treatment to both residents and non-residents offering excisable services, I propose to amend the Excise Duty Act to charge excisable services offered in Kenya by non-residents through a digital platform. The Finance Act introduced excise duty on fees charged on advertisement of alcoholic beverages, betting, gaming, rotaries and prize competition on TVs, print media, billboards and FM stations. This resulted to a shift in choice of advertisement platform from the traditional media to internet and social media. To create a 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."
}