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{
    "id": 901335,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/901335/?format=api",
    "text_counter": 374,
    "type": "speech",
    "speaker_name": "Kipkelion East, JP",
    "speaker_title": "Hon. Joseph Limo",
    "speaker": {
        "id": 1915,
        "legal_name": "Joseph Kirui Limo",
        "slug": "joseph-kirui-limo"
    },
    "content": "There is also an amendment on VAT Act. Since 2017, the National Treasury and KRA introduced withholding tax. When you do some work which attracts VAT at 16 per cent, when you are getting payment, the person who is paying you is required to withhold 6 per cent and only pay 10 per cent. That 6 per cent is withheld and forwarded directly to KRA. That was for intelligence purposes, so that the tax collector will detect that a certain person offered service which attracted VAT. Therefore, if you fail to remit the balance which is 10 per cent, they will remind you that you offered services to a certain person and he remitted the 6 per cent to them and you have not remitted 10 per cent. Over time, the 6 per cent becomes a form of credit to some taxpayers which they are unable to offset. The VAT operates in a different way. When you buy materials, you do it with VAT which is called input tax. When you produce products and then you sell them, you charge output tax. At the end of the month, when you net-off the two, you either pay KRA or you get into a position where you ask for a refund. However, the introduction of Withholding Tax has reduced 6 per cent on the output tax. So, you can end up being on credit forever. This amendment has been brought to allow for an avenue for either an offset or a refund. When the Withholding Tax was introduced in the Tax Procedure Act, it did not address the situation of what would happen if you are continuously in credit. This amendment seeks to address that aspect and allow taxpayers to seek for an offset as long as the Commissioner is satisfied that such excess arises from making zero-rated surplus, and also if the Commissioner is satisfied that that credit arises from appointed Withholding Tax Agents. That means the Commissioner still plays a key role. That is the gist of this amendment, which was supported by almost all the stakeholders who appeared before us. Kenya is one of the countries that heavily depend on taxation to finance her Budget but as much as taxpayers are willing to pay, it is our responsibility to make the tax environment efficient so that it does not cause more pain than the pain that one feels when he pays tax. If this amendment goes through, it will make our tax environment friendly thus making the country friendlier to investors. That would be in line with the Government’s agenda of enhancing ease of doing business."
}