By JOACKIM BWANA | October 8th 2020 at 12:00:00 GMT +0300
The Institute of Certified Public Accountants (ICPAK) wants President Uhuru Kenyatta to extend the tax interventions introduced in April for two more years to facilitate the recovery of businesses and the economy.
This, it noted, will ensure a predictable and stable tax rate. The President had recently announced the tax relieves will expire on December 31, 2020.
ICPAK chair Rose Mwaura urged the Kenya Revenue Authority (KRA) to suspend review of specific exercise duty to cushion business reeling from the effects of Covid-19.
“While the institute is aware that the current tax law permits KRA to review the specific excise duty to be in line with the cost of living or the average rate of inflation annually, there is need to be sensitive to businesses still reeling from the effects of Covid-19, to cushion them during the recovery period,” said Mwaura.
She spoke in Mombasa at a forum to discuss taxation and efficient management of public resources. The ICPAK chair said tax revenue continues to contribute fairly to State coffers, financing up to 55 per cent of the budgeted expenditures.
She said in the Financial Year (FY) 2019/2020, the exchequer revenue collection was Sh1.510 trillion compared to Sh1.477 trillion collected in the FY2018/19.
For the FY2020/2021, she said, it was projected that indirect taxes such as VAT and excise duties will contribute more to the exchequer, compared to direct taxes such as personal and corporate income taxes.
The VAT and excise duty, she projected, will contribute Sh723 billion to the Exchequer compared to at Sh685 billion from income tax. The ICPAK boss urged KRA to maintain the current rates. “We believe this will spur recovery and consequently, enable more collection in the future as opposed to killing the already struggling enterprises,” said Mwaura.