County staff could be denied tax compliance certificates if their employers fail to remit the Sh13 billion they owe the Kenya Revenue Authority (KRA).
A report by the Auditor- General showed county chiefs are holding on to nearly Sh13 billion that their employees contributed during the 2017/18 financial year in Pay As You Earn (PAYE) tax.
KRA Commissioner-General Githii Mburu said as long as the counties fail to remit tax deducted, the employees account with the taxman remains un-updated.
“It means that if the employee requires a tax compliance certificate, we cannot issue it because they are not compliant and yet it is not their fault because the money was deducted at source,” Mr Mburu told journalists.
Edward Ouko, the outgoing auditor general said Governors are deducting taxes from salaries of their employees and members of the county assemblies (MCAs) but not remitting the money to KRA.
He said there is a reflection of income tax PAYE collected amounting to Sh364,103,621,093 in the revenue accountability statements.
Mr Mburu noted that some counties had deducted withholding taxes but have not submitted the money to KRA.
“We shall allow the counties to voluntarily remit once they get their disbursements, failure to which we shall recover it using instruments in law where we attach their accounts and collect the money ourselves,” he said.
His remarks come after the Treasury disbursed Sh50 billion to counties after President Uhuru Kenyatta signed into law the Division of Revenue Allocation Bill 2019 (DoR) on Tuesday.
The funds are for servicing disbursements for July and August at the counties.
Counties have been grappling with delayed Treasury disbursements and dwindling own-revenue collections, which have resulted in delays in suppliers’ payments and workers’ salaries as well as frozen projects. “Aside from governors, we are even going to pursue the county suppliers who receive this money so that they can also pay their rightful share of revenue,” he said.
According to Mr Ouko, county pending bills were estimated to be in excess of Sh100 billion at end of February 2019, of which 40.5 billion was found to be legible for immediate payment.