Financial experts have cautioned over a Government plan to raise the corporate tax rate from 30 to 35 per cent, saying it might scare away investors and lead to job losses if enacted into law.
The Institute of Certified Public Accountants of Kenya (Icpak) said it supported review of the tax law, but called for stakeholder participation on tax proposals by the National Treasury contained in the Income Tax Bill, 2018.
“A higher corporate tax rate of 35 per cent, as introduced, is likely to increase tax revenues from big players in the market to fund the budget deficits. However, this heavy tax burden imposition is likely to scare away investors contrary to the global best practice of giving such corporate investors tax incentives to do business. This, in turn, provides employment opportunities as well as growing the economy,” said ICPAK chairman Julius Mwatu in a statement.
Tax rate
Mwatu spoke on the sidelines of the 34th Icpak Annual Seminar in Mombasa, which ends today.
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Currently, companies are taxed at a rate of 30 per cent while non-resident companies based in the country are taxed at 37.5 per cent. The global average corporate tax rate is 22.5 per cent while the African average rate is 28.5 per cent.
Icpak also argued that the introduction of a new tax rate of 35 per cent on individual incomes in excess of Sh9 million per annum or 750,000 per month had failed to take into account the implications of inflation on the economy.
The accountants called for debate following MCAs' demands for huge loans and ward funds, saying the matter affected taxpayers.
