A Parliamentary committee has opposed sections of the Business Laws (Amendment) Bill, 2019 that seek to offer generous tax breaks for standard gauge railway (SGR) support facilities.
The Finance and National Planning committee chaired by Kipkelion East MP Joseph Limo said the tax incentive will create monopoly in the bulk storage and handling facilities as few players will meet the threshold.
The Bill seeks to amend section A of Part I of the First Schedule to the Value Added Tax Act, 2013, to remove tax on supplies procured locally or imported for the construction of bulk storage and handling facilities.
The Bill also provides for the amendment of the Income Tax Act to provide for investment deductions on capital expenditure at least Sh10 million incurred for the construction of bulk storage facilities of a capacity of no less than 100,000 metric tonnes, for supporting the SGR.
“This is targeting private sector who wants to invest in in SGR facilities. But how can we purport to help private sector whereas those in bulk storage are making heavy profits. This will create a serious monopoly as few investors are willing to invest Sh10 billion,” Joshua Kandie, the MP for Baringo Central said.
The committee said the proposed law should be amended to provide incentives to many players instead of creating room for monopolies. “There are very few companies that are in bulk storage in the SGR. We need to allow many private sector players to invest. There will be few people willing to put Sh10 billion investments on SGR facilities and we shouldn’t support one player,” Mr Limo said.