Entry Instance

HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept

{
    "id": 1590409,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590409/?format=api",
    "text_counter": 339,
    "type": "speech",
    "speaker_name": "Molo, UDA",
    "speaker_title": "Hon. Kuria Kimani",
    "speaker": null,
    "content": "Rewarding consumable practices aligns with Kenya's commitment to climate change under the Paris Agreement and the Kenya Vision 2030. Many of the proposals draw from the Keynesian Fiscal Stimulus Principle, which argues for proactive government intervention to spur aggregate demand during times of economic slack. By incentivising sectors such as housing, green energy and manufacturing, the Bill aims to create jobs, increase household incomes and drive long-term economic growth while preserving fiscal discipline. As Richard Musgrave said in his book, The Theory of PublicFinance in 1959, public finance is not just about raising revenue, but about shaping the economy and the society that we, the just people of Kenya, want. Further, the primary objective of the Bill is guided by stakeholder input with the views of Kenyans and established policy frameworks to streamline tax expenditures, reduce revenue leakage and promote fairness through targeted tax incentives aligned with the national development goals. In addition, the amendments proposed by the Committee aim to enhance predictability and stability within the tax regime, critical factors in fostering a conducive and competitive business environment that supports long-term investment and effective economic planning. A consistent and transparent tax framework empowers investors to make informed, long-term decisions with greater confidence by reducing the uncertainty often associated with frequent unpredictable legislative changes. The Committee conducted extensive public participation and based on the views received, proposed far-reaching amendments to the Bill while also expressing support for certain provisions as originally drafted. The definition of the word “software” in Clause 2 includes both the software itself and its distribution within the meaning of royalty. The Committee observed that the distribution of software does not by itself constitute a royalty-generating activity and, therefore, including it in a search could lead to unintended tax implications for distributors. In line with international best practices, the Organisation for Economic Co-operation and Development (OECD) guidelines and to safeguard the interests of stakeholders and Kenyans operating in the sector, the Committee recommended the deletion of the phrase to exclude the distribution of software from the definition. This amendment seeks to provide clarity amid misinterpretation and ensure a fair and accurate tax framework for software-related transactions. Clause 4 of the Finance Bill proposes a clean-up of the amendments introduced under the Tax (Amendment) Act, 2024, which exempted all pension payments, including lump-sum withdrawals from Income Tax. However, certain provisions that previously granted separate exemptions for lump-sum pension payments were not repealed, resulting in a potential ambiguity. To address this, the Bill seeks to repeal those redundant provisions and rated exemptions. The Committee supported this proposal noting that the amendment enhances clarity and affirms that all pension payments, whether received as a lump-sum or monthly, are fully exempt from Income Tax as originally intended. The Committee carefully considered Clause 6, which proposes to remove the Ksh5 million threshold for the Significant Economic Presence Tax (SEPT). The Committee observed that the existence of the threshold creates loopholes for revenue leakage, particularly because non-resident entities or individuals are not required to file tax returns. This makes it difficult for the KRA to verify compliance. As a result, the KRA is unable to confirm whether the threshold has been met, therefore, hindering effective enforcement. To address this challenge, the Committee supported the proposal to remove the SEPT threshold altogether as a means of enhancing compliance and reducing opportunities of tax avoidance. On Clause 8(a)(v) and (vi) that pertains tax deductions for construction of stadia, the Committee welcomes the proposal as a progressive step that aligns with the government’s agenda of promoting sports infrastructure and youth development across the country. Investing 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."
}