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{
"id": 1485392,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1485392/?format=api",
"text_counter": 256,
"type": "speech",
"speaker_name": "Bonchari, UPA",
"speaker_title": "Hon. Charles Onchoke",
"speaker": null,
"content": "Ministry of Investments, Trade and Industry; the Kenya Association of Manufacturers, and the management of M/s Blue Nile Rolling Mills Limited. Having considered submissions by stakeholders, the Committee made the following findings: That, the Special Operating Framework Agreement dated 18th December 2019 contravened: 1. Article 35 of the Constitution on access to information in regard to Article 7 of this Agreement, which has a confidentiality clause. 2. Article 201 (a) on principles of public finance on openness and accountability, including public participation. 3. Article 95 (4)(c) of the Constitution with regard to the oversight role of the National Assembly over national revenue and its expenditures. 4. Article 210 (2) of the Constitution on maintenance of public records of tax waiver and its report to the Auditor-General. 5. Articles 10 (2) (c) and 118 of the Constitution, which require good governance, integrity, transparency and accountability. There was non-conformity with the relevant Statutes. The Agreement failed to conform with the relevant Statutes, including Section 13 of the Income Tax Act, Cap. 1 and 7, Laws of Kenya, which allows the Cabinet Secretary to exempt any income or class of income accrued in or derived from Kenya from taxation. Hon. Temporary Speaker, firstly, this is supposed to be done by publishing a Gazette Notice to that effect, in accordance with the sub-section. Secondly, it is supposed to be done by submitting the notice to be laid in the National Assembly without unreasonable delay, in accordance with Sub-Section 3. These are requirements that the Committee observed were not adhered to since the Cabinet Secretary for the National Treasury neither published the notice in the Gazette nor submitted it for laying before the National Assembly for approval. Hon. Temporary Speaker, Section 68 of the Value Added Tax Act, Cap. 476 of the Laws of Kenya has all Special Operating Framework Agreements entered into with the Government, which were in existence at the commencement of the Act in 2022. The Agreement was signed between 16th and 30th January 2020, which falls within the timelines of the agreements under the Value Added Tax Act. Consequently, the Committee found out that the purported Special Operating Framework Agreement between M/s Blue Nile Rolling Mill Limited and the Government was not entered into procedurally and, therefore, is unlawful. The company ought not to benefit from the said saving. The process also contravened the provision of the Law of Contract Act, Cap. 223 of the Laws of Kenya in relation to their signature and affixing of common seal. The Agreement has three signatures appended by parties but on different dates and places. This implies that all the parties were not present during signing, contrary to the principles of the Law of Contract. The Agreement was void to the extent that it lacked the affixing of the common seal of one of the parties. Further, the agreement does not conform with the Miscellaneous Fees and Levies Act, Cap. 169(c) of the Laws of Kenya. Article 5 of the Agreement seeks exemption from import declaration fees and Railway Development Levy. However, the same has not been exempted under the Miscellaneous Fees and Levies Act. Based on the provisions of the Tax Procedures Act, Cap. 169(b), Laws of Kenya, the Committee considered the failure by M/s Blue Nile Rolling Mill Limited to remit the attendant taxes a tax avoidance, as defined in Section 3 of the Act, as the transaction or scheme is designed to avoid liability to pay tax under any law. From the submission by the National Treasury, the Committee observed that due to the tax avoidance, the Government lost revenue in terms of unpaid tax amounting to Ksh2,311,775,548 as of July 2024. 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."
}