Treasury Cabinet Sectary Ukur Yatani said the Finance Bill is expected to become law by end of this month, setting the stage for introduction of new taxes from July 1.
The Business Laws (Amendment) Act, which became law on March 21, requires the Treasury to table the Finance Bill in Parliament before April 30 and have it approved by the President as law by June 30.
This is a departure from the current trend where the Finance Bill is tabled in Parliament after the third week of June and takes months before it becomes law.
Companies and individuals will start paying new taxes at the start of a financial year after changes to the law requiring earlier approval of the Finance Bill to avoid delays that have in the past hurt revenue collection targets.
Treasury Cabinet Sectary Ukur Yatani said the Finance Bill is expected to become law by end of this month, setting the stage for introduction of new taxes from July 1.
The Business Laws (Amendment) Act, which became law on March 21, requires the Treasury to table the Finance Bill in Parliament before April 30 and have it approved by the President as law by June 30.
This is a departure from the current trend where the Finance Bill is tabled in Parliament after the third week of June and takes months before it becomes law.
The resulting delays have made it difficult for the Kenya Revenue Authority (KRA) to meet its revenue collection targets, prompting frequent reviews of the national Budget to accommodate the revised figures.
“Contents of Finance Bill are expected to be law by July. This means new taxes will take effect when the new financial year starts,” Mr Yatani said yesterday.
Those expected to take effect on July 1 include income tax on pension for those above 65 years, 14 percent VAT on cooking gas, minimum tax of one percent on company sales, and digital tax of 1.5 percent on sales of foreign tech firms with earnings from Kenya such as Uber and Google.
President Uhuru Kenyatta signed the Finance Bill for the current financial year on November 7, meaning that by then, the KRA had lost four months of collecting new taxes outlined in the Budget.
The period between the tabling of the Finance Bill — which spells out the new taxes to fund annual State operations — in Parliament and the proposal becoming law is usually punctuated by back and forth discussions among MPs, the Treasury and State House.
Last year, for instance, the Finance Bill was delayed by late tabling in Parliament and its rejection by Mr Kenyatta after he demanded that lawmakers remove a cap on commercial lending rates contained in the proposed law.
This forced MPs to indirectly endorse the removal of the rate cap by failing to raise votes required to overturn the presidential decision, setting the stage for approval of the Bill on November 7.
The move was the latest in a running dispute over the rates cap, which the government and banking officials say is debilitating to the economy because it stalls lending.
As a result of the exchanges between Parliament and State House, collection of new taxes started late, raising concerns from the KRA about the late approval hurting its ability to meet the tax targets.
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