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{
    "id": 1511296,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1511296/?format=api",
    "text_counter": 372,
    "type": "speech",
    "speaker_name": "Hon. Kuria Kimani",
    "speaker_title": "",
    "speaker": {
        "id": 13435,
        "legal_name": "Francis Kuria Kimani",
        "slug": "francis-kuria-kimani"
    },
    "content": "because the three deductions are first of all based on the gross amount and are not tax allowable for Pay As you Earn (PAYE) apart from NSSF. This Bill, therefore, provides that those statutory deductions be tax allowable for PAYE so that we can try to increase the disposable income that is available to employed Kenyans. Once their take-home and disposable income increases, it is going to ease the cost of living and increase their purchasing power Clause 3 of the Bill is proposing to amend the limit for non-taxable benefits related to employment, increasing it from Ksh36,000 to Ksh60,000 per year. This adjustment will address the value of non-cash benefits such as airtime or data provided to employees by their employers which was last reviewed in 2006. This revision will seek to account for the impact of inflation over the years. Additionally, this proposal will include an increase in the value of non-taxable benefits provided to employees, raising them from a limit of Ksh48,000 to Ksh60,000 per. This amount was last reviewed in 2006 and therefore, this adjustment would want to speak to inflation. The Committee is in support of these proposals, recognising that they have a great potential to increase employees' disposable income and provide the much more needed financial relief. The repeal of the Digital Service Tax and its replacement with a significant economic presence tax at the rate of 30 per cent on 10 per cent of the deemed profit is contained in Clause 5. The Committee acknowledges that digital services providers enjoy higher profit margins due to lower production costs compared to companies with physical presence and therefore, the adjustment is to align the deemed profit more closely with what would be expected if the companies faced similar cost structure. This is a revenue enhancement measure to ensure that digital service providers pay their fair share of tax. I had spoken to the issue of minimum tax. The Committee strongly supports the measure for introduction of a minimum top-up tax, noting that it is global adoption in over 60 countries where main key international companies operate. Failing to implement this tax in Kenya could undermine the fair application of tax obligations and potentially allow constituent companies located in Kenya to underpay their share of revenues. Clause 14 is speaking to introduction of 5 per cent tax on interest, income earned by resident individuals from bonds, notes and similar securities used to fund infrastructure and social services, commonly referred to as infrastructure and green bond. This proposal has raised a significant concern regarding the potential impact in the economy and investment climate. Taxing infrastructure bonds and FOREX transaction as outlined in the Bill could have a far- reaching implication on foreign investment inflows, particularly from portfolio investors. These investors typically evaluate various incentives before deciding where to invest their funds. So, the introduction of such taxes may make Kenya a less attractive destination for investment, discouraging the much-needed foreign capital. The stock market is also likely to feel the ripple effects. Increased costs associated with trading FOREX and taxation of infrastructure bonds may prompt portfolio investors to reduce their market exposure, and this could lead to a decline in stock prices, reduced market liquidity and heightened volatility. Similarly, the bond market may face challenges. Taxing infrastructure bonds could diminish the appeal to investors seeking stable fixed income instruments. This, in turn, could lead to a higher borrowing cost for infrastructure projects undermining the Government's ability to secure funding for critical development activities. Other countries that have implemented similar measures offer valuable lessons. For instance, India's Security Transaction Tax (STT) on FOREX transaction has been criticised for dampening market liquidity and deterring foreign investment. Similarly, countries like Brazil and South Africa have experimented with taxes on infrastructure bonds to support development projects but these measures have really struggled to attract sufficient investment."
}