Wednesday 4 March 2020

Tax Updates March 2020 - In the News

Earlier enactment of the Finance Act

The government seeks to have the Finance Bill passed by Parliament and assented by the President by 30th June every year. This is in response to declaratory orders by the High Court in Okiya Omtatah Okoiti v Cabinet Secretary, National Treasury & 3 others [2018] eKLR whereby the Court declared the Provisional Collection of Taxes and Duties Act No.44 of 1959 unconstitutional.

Legacy data migrated to iTAX

KRA has begun migrating all historical tax balances to the iTax system. The move is welcome especially for taxpayers with tax credits brought forward from previous years. On the other hand the legacy system was error laden. Correcting the errors will be a difficult task more so because tax payers are not obligated to keep records beyond a period of 5 years.

LSK and KRA disagree on representation at the Tax Tribunal

The Law Society of Kenya has disagreed with KRA’s move to vet lawyers who represent taxpayers at the Tax Appeals Tribunal. LSK argues that the move is procedurally unfair. It is our opinion that the move is unconstitutional since every person has a constitutional right to be represented by a lawyer of his or her choice.

High Court rules that Demurrage is subject to income tax

The High Court ruled that demurrage is not part of freight cost for goods. The Kenya Income Tax Act doesn’t explicitly classify demurrage as income for the owner of the intermodal container. Modern income tax legislation e.g. the Tanzanian Income Tax Act of 2004 explicitly classify demurrage as income subject to income tax. We expect the Shipping lines/ agents to appeal to the Court of Appeal for final determination of the matter.

KRA to collect revenue for Nairobi County Government

Kenya Revenue Authority is set to start collecting parking fees, business licenses, land lease fees and buildings’ approval charges for Nairobi County with effect from mid-March 2020. This follows the transfer of some of the functions of the Nairobi County Government to the National Government. We expect KRA to integrate with iTax system with the Nairobi County revenue management systems. This will make it easier for KRA to widen the tax base especially among the small traders.

Sugar Task force recommends re-introduction of Sugar levy

The president received the report by the sugar task force. The task force recommended the introduction of the sugar development levy. Reintroduction of the levy is likely to lead to higher prices of sugar for consumers.

Contact us for assistance:-

East African Tax Consulting
Starlings Muchiri (Director); or Samuel Karanja (Director)
Tel. +254 722 332729

East African Tax Consulting is an Associate of Muthomi & Karanja Advocates

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