As the festive season draws near, our minds are filled with dreams of shiny new gadgets, snug sweaters and perhaps a delightful weekend escape.
But for Kenyan taxpayers, the ultimate Christmas wish is a bit different. We're hoping for favourable legislative changes to spread the holiday cheer. We look at five Christmas wishes.
Nothing brightens a day like debts forgiven, The Finance Act, 2023, a new chance given. With penalties and interest waived, a chance to start anew, For taxes due till December 2022, a gift for me and you.
From September 2023 to June 2024, Taxpayers could clean up their ledgers and more. Swiftly resolving disputes, enjoying relief, with penalties waived, bringing much-needed peace.
Let’s celebrate, the Tax Procedures Act, 2024 changes are great, extending the amnesty to June 2025, would make taxpayers' spirits thrive. To make this extension even more bright, cover taxes due as of December 2023. Let's extend the cheer, and bring more relief in the coming year!
A Fairer Tomorrow:
Expanding Tax Bands
Expanding the tax bands will create a fairer way, a more progressive system for everyone today. By raising the threshold from Sh24,000 to Sh50,000 per month, We can support low-income earners, easing their crunch.
With rising costs and inflation in sight, this change will bring much-needed light with wider bands, we can invest, in a future that’s truly the best.
The National Health Insurance Fund took its leave and the Social Health Insurance Fund begun its weave, contributions to the National Social Security Fund grew, and universal health care and equity nearer drew.
We suggest harmonising the marginal employment income tax rate, with the corporate rate, to align with the state. Following the Government’s Medium-Term Revenue Strategy, let's bring fairness and cheer to our tax policy!
The Burden of Five Days:
A Call for Fairness
The Finance Act, 2023 brought a change, to the Income Tax Act and Tax Procedures Act at hand. Taxpayers must remit withholding tax in just five days, a burden that adds to their compliance maze.
Previously, a month was the time they had, to make their payments, which wasn't bad. We suggest bringing this period back, or setting one day a month to stay on track.
Remitting withholding tax five to six times a month, is a heavy load, a compliance crunch. Up to 72 times a year, compared to 12, in Uganda and Tanzania.
This is a heavy toll, on a fair tax code, it takes a toll. Kenya should align with others, to let taxpayers free. Let's make it easier, bring festive cheer, and align with policies that are fair and clear. Enhance the ease of doing business here, and spread the joy of a prosperous year.
The E-Invoice Mandate:
A business burden
Starting January 2024, businesses must use e-invoices to claim expenses, without them, deductions are lost, and compliance is a must. Exceptions like emoluments, interest and imports stand, but generally, no e-invoice means no expense at hand.
This new rule adds an administrative strain, ensuring suppliers comply, a task that can be a pain. Though transparency and efficiency are the goals in sight, the time for compliance checks will rise overnight.
The stakes are high, the margins tight, without e-invoices, taxes might spike. Corporate income tax and Value Added Tax claims at risk, higher taxes loom, a financial twist.
Transitioning to e-i voicing, a significant stride, but rushing this change, we should not abide. With inflation rising, business growth is slow, easing the process could help the flow.
Easing the SHIF Load:
A Fairer Approach
At 2.75 percent, the Social Health Insurance Fund takes its share, from gross incomes. Universal healthcare, a noble aim, but double burdens bring financial strain.
Exempting those with private or employer care would be fair. It would ease the burden on Kenyans, and lighten the load for both you and me.
This move would help the insurance scene, where private policies might otherwise lean. Avoiding double costs, a sensible act, for a healthier nation, that's a fact.
The writers are in the Tax Consulting unit, PwC Kenya
