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{
    "id": 1508259,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1508259/?format=api",
    "text_counter": 59,
    "type": "speech",
    "speaker_name": "South Mugirango, UDA",
    "speaker_title": "Hon. Silvanus Osoro",
    "speaker": null,
    "content": "Tax Procedures Act speaks to the debts that are no longer applicable. As the current law provides, those very debts are no longer applicable. Let me also speak to the penalty for failure to deduct withholding VAT. What are the penalties? Clause 5 of the Bill further proposes to amend Sub-section 4C by introducing 10 per cent penalty on the amount of withholding VAT, if it is not deducted from a payment or if the deduction is not remitted to the KRA within five working days. The penalty here that seeks to be introduced is in Subsection 4C which is 10 per cent of the amount of withholding VAT. If the amount you ought to remit when you calculate the deduction is Ksh100,000 and then you are unable to remit it by design or someone has failed to deduct it deliberately, then you will have a penalty of 10 per cent of such an amount that needs to be remitted. This will be Ksh10,000 within five working days. So, you have a window here. You have deducted it. Remit it within these five days. If you do not remit it to KRA within five days, you will get this fine. At least, you have these five working days. If it happens over the weekend, then it is not a working day. You will have that holiday of extra two days which makes them seven days. It is very important for this House to know that Clause 5(b) of the Bill seeks to change the penalty from a criminal one as it is to an administrative offence. The law criminalises it currently and it comes with retributive natures. Why would we seek to place punishments on issues that can be handled administratively? We can actually raise more funds from that instead of punishing you. Some people consider punishments which are not monetary or pecuniary in nature as the best. But this amendment then seeks to create or change the penalty from criminal and make it administrative. We should not criminalise the question of remittance of taxes. We should find a way. That is why the Tax Procedures (Amendment) (No.2) Bill manoeuvres a language to make sure that we meet at a common ground of understanding from both sides; the taxpayer and tax collector or taxman. Therefore, cases on failure to withhold tax or remit withheld tax will be resolved more quickly and directly by the tax authorities, making it easier to settle tax disputes. This also helps to cure the question of unnecessary bribery. If you know that you have not remitted the withholding VAT and it is criminal, most rogue business people who want to evade taxes find a way to bribe the investigative agencies so that they are not investigated. The Government loses and the percentage of this amount or this amount ends up in people's pockets. We have provided a provision where you have five days to remit the taxes and five days to deduct it which makes it easier. You will pay 10 per cent within this period of time, if you do not remit the tax, deduct it and you do not remit it or fail to deduct it. Let us look at the refund period of the overpaid taxes. Clause 6 of the Bill proposes to amend Section 47 of the Tax Procedures Act to give taxpayers the option to apply to KRA to offset overpaid taxes against outstanding tax debts and future tax liability or to request a refund of the overpaid amount. For example, for income tax, taxpayers can make this application within five years from the date the tax was paid. For other types of taxes, the application must be made within six months from the date of over-payment. For Income Tax, it is five years. For any other type of tax, it must be made within six months. The deal here for Income Tax refund is five years. Under the current provision, we need to compare. Under the current Tax Procedures Act, taxpayers can apply for a refund of overpaid taxes, with an exception of VAT within a period of five years. Under Sub-section b(i), the proposed amendment seeks to change this by limiting the five-year period for refunds to Income Tax only. For other types of taxes, it is six months. In Sub-section b(ii), the amendment introduces a new short limit of six months to apply for a refund for all the other types of taxes so that somebody does not hold your money for such a long period of time. The Government will now not be holding your money for all that period of time. You now have to make an application within six months, except for the Income"
}