Editorials

Avoid unpredictability in government tax policy

kra

Times Tower in Nairobi, the Kenya Revenue Authority headquarters. FILE PHOTO | DENNIS ONSONGO | NMG

The move by the Kenya Revenue Authority (KRA) and the Treasury to demand taxes from companies that had either reached a settlement with the tax or received waivers raises questions on the fairness and predictability of government policy.

The tax demands under the new administration come after top officials in the Executive had made allegations that some companies had not been paying their fair share of taxes.

NCBA Group and Kenya Breweries Limited (KBL) have been slapped with new tax demands of Sh900 million and Sh8.2 billion in the ongoing review at Times Tower.

As expected, the companies have put up a spirited fight, challenging the actions in courts which have temporarily barred the KRA from collecting the amounts until the matters are determined.

Their key argument is that the taxman and the Treasury cannot make decisions and then seek to undo the same later on.

KBL, for instance, says it paid the KRA Sh3.5 billion in January 2021 in a settlement that saw the taxman relinquish its claim of Sh8.2 billion which it has now revived.

NCBA has also gone to court after the Treasury reversed a decision to exempt the bank from capital gains taxes issued in the previous administration.

These disputes will be settled in court but the dismantling of government decisions sends a message of policy unpredictability.

Everyone should pay their fair share of taxes and it is in order to look into instances where officials may have abused their discretion to give waivers or settle tax disputes in favour of taxpayers.

The big question is how comprehensive are these reviews?