Treasury is planning a review of income tax in a bid to simplify tax administration in Kenya.
It had given the public until February this year to submit views on the planned overhaul of the Income Tax Act.
ICPAK has proposed a raft of measures to facilitate the simplification of the income tax system.
The Institute of Certified Public Accountants of Kenya (ICPAK) has called for the development of a tax policy to guide changes to the Income Tax Act, which is set for a review for the first time in decades.
According to ICPAK national chairman Fernandes Barasa, the Institute has proposed a raft of measures to facilitate the simplification of the income tax system.
The National Treasury has previously said it plans to review income tax in a bid to simplify tax administration in the country.
“As such, the review of the Income Tax Act should be predicated on an income tax policy as a precursor to the review of the law,” Mr Barasa said on Thursday.
“It is therefore the Institute’s professional opinion that an income tax policy be developed to guide the review process of the income tax act,” he added.
ICPAK is proposing consolidation of taxation of income in various sectors within one legal instrument and in line with the International Financial Reporting Standards (IFRS).
It says a review of complexities in the current system should lead to design of a more responsive income tax regime.
Accountants also want the government to consider establishing laws that are reflective of investment characteristics of various sectors in the country.
Treasury had given the public until February this year to submit views on the planned overhaul of the law.
Harmonise changes in the law
The government began reviewing various tax laws including the Value Added Tax (VAT) and Excise Tax Act in 2014, but is yet to do the same with the Income Tax Act.
Tax experts say a review would go a long way in eliminating contradictions in the income tax regime.
“The current Income Tax Act came into force in 1973. Each year amendments are made in the budgets and subsequent Finance Acts but we haven’t consolidated all these and there are many contradictory provisions now. Many, including KRA, have attempted to consolidate but this has invariably led to a confusing Act. So a rewrite should help to consolidate all the changes and give more clarity,” tax expert Nikhil Hira said in a previous interview with the Business Daily.
Mr Barasa was speaking on the sidelines of the 33rd ICPAK annual seminar in Mombasa.
