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{
    "id": 1590980,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1590980/?format=api",
    "text_counter": 195,
    "type": "speech",
    "speaker_name": "Hon. John Mbadi",
    "speaker_title": "The Cabinet Secretary for the National Treasury and Economic Planning",
    "speaker": null,
    "content": "respect, the Bill is proposing to amend the Income Tax Act to clarify that all gratuity payments, whether from public or private sources, are exempt from tax. To encourage wider participation in virtual asset transactions, especially among the youths, the Bill proposes to reduce the digital asset tax rate from 3 to 1.5 per cent. And to ensure consistency and effective administration of the law, the Bill proposes to amend the Third Schedule to the Income Tax Act to clarify that fringe benefit tax is payable by the employer at the corporate tax rate, and that withholding tax on qualifying dividends and qualifying interest is final tax. That is not clear in the current arrangement. Hon. Speaker, under the current Income Tax Act, individuals with mortgages, and Hon. Members, would be interested in listening to this, for purchasing or improving residential houses can claim tax relief on interest payments on the mortgage. However, those who take up a mortgage to construct their residential houses are excluded from this relief. That is the law as it is today. To ensure fairness, the Bill proposes to extend this benefit to interest on mortgages taken for the construction of residential houses. This will support home ownership and align with the BETA Pillar on Affordable Housing. The current tax-free daily subsistence allowance of Ksh2,000 for private sector employees on official duties outside their usual workplace is lower than that of the public sector employees. To enhance equity, the Bill is proposing to increase the tax-free daily subsistence allowance for private sector employees from Ksh2,000 to Ksh10,000. Kenya has an opportunity to strengthen its position as a regional financial hub. In this respect, the Bill proposes amendments to the Income Tax Act to provide that companies certified by the Nairobi International Financial Centre Authority (NIFCA) that invest new capital of at least Ksh3 billion over three years to pay a reduced corporate tax rate of 15 per cent for the first 10 years and 20 per cent for the subsequent 10 years. The companies qualifying for this will be required to employ Kenyans at the senior management level. The start-up companies that are certified by the Nairobi International Financial Centre Authority will enjoy a 15 per cent tax rate for the first three years and 20 per cent for the subsequent four years. Dividends earned by certified holding companies and regional headquarters will be exempted from tax, provided that at least Ksh250 million is reinvested annually in Kenya. We have noted that some employees seek refunds from KRA on reliefs of deductions that ought to have been deducted by their employers. To address this challenge, the Bill proposes to amend the Income Tax Act to make it mandatory for employers to consider all eligible tax reliefs and deductions when computing employees' income tax. Presently, employers are not compelled to deduct these reliefs in computing Pay As You Earn. On Value Added Tax, while a supplier is required to issue a Tax Invoice at the point of sale, there is currently no definition of tax invoice under the VAT Act. This creates ambiguity on what constitutes a Tax Invoice. To resolve this ambiguity, the Bill proposes to amend the VAT Act to define a Tax Invoice. Hon. Speaker, to strengthen tax administration and enhance compliance, the Bill proposes to require the issuance of tax invoices for all supplies whether taxable or exempt. This amendment will support better record-keeping by taxpayers and facilitate the pre-population of returns. To support business operations, the Bill proposes to shorten the period for claiming refunds on bad debts from three years to two years, and to allow taxpayers to either request for a refund or offset it against future VAT liabilities. Entities in Special Economic Zones currently benefit from VAT exemptions and zero-rating, but there is no provision to recover tax when these benefits are misused. To safeguard revenue and promote accountability, the Bill proposes to recover VAT where exempted or zero-rated goods or services are used for purposes other than those intended. 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."
}