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{
"id": 1590979,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590979/?format=api",
"text_counter": 194,
"type": "speech",
"speaker_name": "Hon. John Mbadi",
"speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
"speaker": null,
"content": "I will begin with the customs measures and later provide highlights on the proposed amendments of tax laws in the Finance Bill, 2025. To meet the local demand of rice, Kenya was allowed to extend the stay of application on the EAC Common External Tariff and import rice at the rate of 35 per cent or US$200 per metric tonne, whichever is higher, instead of the Common External Tariff rate of 75 per cent or US$345 per metric tonne. Mindful of wheat farmers in Kenya, EAC Ministers agreed on duty remission of wheat at a rate of 10 per cent instead of the Common External Tariff rate of 35 per cent, provided the millers who intend to import wheat under the duty remission must first purchase locally produced wheat. To promote local assembly of telecommunication equipment, Kenya was granted an extension of duty remission on inputs for assembly of telecommunication devices, including mobile phones, laptops and tablets. In order to reduce the production cost of animal feeds, Kenya requested for an extension to import inputs for production of animal feeds duty-free under the EAC duty remission scheme which was granted. We urge the producers of animal feeds to apply for the remission. Hon. Speaker, the leather sector is one of the priority value chains under BETA. To support local producers of leather and leather products, Kenya was allowed to extend the stay of application on the Common External Tariff rate and apply import duty rate of 35 per cent on leather products. To promote tanneries and supply local manufacturers with high quality leather, Kenya was allowed to import chemicals for leather processing under duty remission. To support local assembly of transformers, which is critical to energy distribution, the EAC Ministers approved Kenya's request for a tariff split on transformers to provide for a distinction between fully built and unassembled transformers. Currently, it is one tariff line which is very difficult for us to separate and incentivise either of them. To support the local assemblers of cranes, Kenya was granted approval to import inputs for assembly of cranes duty-free under duty remission. Last year, Kenya was granted a stay of application on the EAC Common External Tariff to apply a higher duty rate ranging from 25 to 35 per cent on certain types of paper used in manufacturing packaging materials. This action adversely affected exporters, particularly in the tea sector. To address this, Kenya opted not to request for an extension of the stay of this Common External Tariff. This decision will not affect local manufacturers of packaging materials as they will continue importing raw materials under duty remission. Hon. Speaker, let me speak to the Finance Bill, 2025. I will highlight some of the proposals contained in the proposed Finance Bill, 2025. Under Income Tax Act, to enable faster recovery of investment by businesses on loose items such as utensils, linen and industrial tools, the Bill proposes to amend the Income Tax Act to allow for a full cost deduction of these items in the first year of purchase as opposed to the current three years. This will improve cashflows of the relevant businesses. We have noted increased tax disputes arising from audits carried on cross-border transactions. These disputes could have been avoided if the multinational companies had Advance Pricing Agreements with the Commissioner at KRA. To address this gap, the Bill proposes to amend the Income Tax Act to empower the Commissioner to enter into Advance Pricing Agreements with multinational companies. Hon. Speaker, the Tax Laws (Amendment) Act, 2024, passed in December last year, introduced the Minimum Top-up Tax in line with global best practices. The Act inadvertently omitted the due date for payment of the tax, thus creating enforcement challenges. To address this, I have proposed an amendment to the Income Tax Act to clarify that the due date will be the end of the fourth month following the close of a company's accounting period. Again, the Tax Laws (Amendment) Act, 2024, passed in December last year, exempted gratuity payments from income tax – Pension and gratuity. However, the provision is not clear whether all gratuity, including from private pension schemes, is exempt from tax. In this 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."
}