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{
    "id": 1442022,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1442022/?format=api",
    "text_counter": 120,
    "type": "speech",
    "speaker_name": "Molo, UDA",
    "speaker_title": "Hon. Kuria Kimani",
    "speaker": null,
    "content": "need for us to reassess our tax policies and explore more effective measures that favour the business environment and enhance revenue collection. The Kenyan Government has embarked on a tax reform agenda through the Medium-Term Revenue Strategies (MTRS), aiming to increase the tax-to-GDP ratio to 25 per cent by 2030. This reform is crucial for aligning Kenya with its regional peers and ensuring sustainable economic growth through improved domestic resource mobilisation. The reason why there is an increased debate on taxation in this country is because we have 20 per cent of Kenyans contributing to 80 per cent of our taxes. That means there is a need to have a robust expansion of our tax base. If everyone in this country pays their equitable share of taxes, then we will not have to weigh this on the 20 per cent who are paying 80 per cent of our taxes. I would like to highlight a significant aspect of Kenya's economy. Over the past decade, we have witnessed the emergence of employment opportunities, especially around the digital marketplace. This contributes to a significant economic evolution. Furthermore, the majority of jobs created during this period have been in the informal sector. As of 2022, approximately 83.3 per cent of the 19.15 million Kenyan workers have been employed in the informal sector, reflecting the crucial role of the informal sector in our economy. This shows the importance of developing policies and strategies to regulate and support this vital segment. The Finance Bill of 2024 had several tax proposals that will enable this country to increase its tax base, especially increasing its revenues. The Committee carried out public participation and deliberated the matters which informed our decisions. For instance, Clause 2 of the Finance Bill 2024 is expanding the definition of digital content monetization to include all creative work. The Committee noted that not all creative works generate income. To align with international best practices, it is very necessary to specify that only those generating income are subject to tax. The Clause also talks about the definition of software, which includes software and royalties in the definition of software and royalties. To safeguard the interests of distributors in this sector, the Committee decided to delete this proviso and exclude the distribution of software from this definition. There has been a notable change in the global arena of tax administration, where governments or parliaments change tax laws to align with court decisions. I think a case in point is the Seven Seas case versus Kenya Revenue Authority (KRA) in Kenya, where there was a contestation of the definition of royalties to include software. Globally, the most popular one is the case of the engineering firm in India over the definition of software. We appreciate that in as much as it is an improvement to our jurisprudence and our laws to make law processes that align with the decisions of courts, we need to be careful not to abuse the power of law legislation to negate the judgments made by our courts. Clause 4 proposes to reduce the period for claiming deferred realized foreign exchange losses from five years to three years. The Committee supports retaining the current period, allowing businesses to recover foreign exchange losses over five years instead of the proposed three years, especially during these times of uncertainties in the global market and the de- dollarisation of the markets. For example, we have seen some of our global leaders backing their currencies through gold as opposed to the most popular used currencies such as the US dollar. Clause 6(b)(2) proposes to exempt reimbursement of expenses incurred for asset purchasing during official duties by public officers, which was extensively discussed with stakeholders. The Committee ultimately decided to remove this amendment that aimed to exclude public officers from taxation on employment of benefits received as reimbursements for asset acquisition. This decision was driven by concerns by members of the public that such an exemption would unfairly discriminate against private-sector employees and could potentially be abused. As framed in the Bill, there is no definition of what these assets are. We, 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."
}