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{
    "id": 1590411,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590411/?format=api",
    "text_counter": 341,
    "type": "speech",
    "speaker_name": "Molo, UDA",
    "speaker_title": "Hon. Kuria Kimani",
    "speaker": null,
    "content": "The Committee reviewed and supported Clause 8(b)(i) that proposes to amend the Income Tax Act to allow interest deductions on mortgages taken for construction of residential houses. Under current legal framework, the Committee noted that such deductions are limited to mortgages used to purchase or improve primary residences, with no express provision permitting deductions for home construction. The gap excludes individuals who opt to construct their own homes from benefiting mortgage interest relief. The Bill explicitly seeks to include mortgage interest deductions for residential construction. Thereby, reducing the tax burden for individuals financing home construction. The Committee supported this proposal noting that it promotes fairness and encourages investment in home ownership. The role of taxation is not to punish wealth but to fund common good and correct market blind spots. The Committee carefully considered Clause 8(c) and (d) that proposes to introduce a time limit on the carry-forward of business losses. Currently, businesses may carry forward losses indefinitely yet they are only required to retain records for five years. It creates verification challenges. To address this, the Bill is proposing a five-year cap. However, after listening to stakeholders, the Committee amended the proposal to allow for additional five years extension upon application and approval. The approach balances administrative efficiency with business flexibility. It aligns with the public finance principle of time consistency and fair tax policing outlined by Richard Musgrave. It reduces the abuse of indefinite carry forwards and promotes simplicity, predictability and equity in tax systems. Clause 16 introduces a withholding tax on payments to non-resident ship owners. The Committee supported the proposal as a strategic move to enhance tax compliance and revenue collection from foreign entities that operate in Kenya without a physical presence. The measure reduces dependency on self-reporting and ensures earlier and more reliable tax remittances through withholding at source. With proper implementation guidelines and digital systems, the Committee noted that the measure could be administered efficiently and fairly. It aligns with the Benefit Principle of Taxation that holds that those who benefit from operating in a particular market should contribute to its tax base. Moreover, this is consistent with the UN Model Double Tax 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."
}