Treasury gets nod to exempt KQ from new tax

Kenya Airways planes at Jomo Kenyatta Airport(JKIA), Nairobi.[Boniface Okendo,Standard]

Parliament has backed Treasury’s plans to exempt Kenya Airways (KQ) from paying minimum tax in a move that offers a reprieve to the loss-making firm.

The tax became effective January this year and firms are required to pay it or normal corporate tax, whichever is higher and whether making profit or loss.

The National Assembly’s Committee on Delegated Legislation attributed KQ’s exemption to the devastating effect that Covid-19 has had on the global aviation industry.

This, they noted, hurt “the already ailing company that made a loss of Sh36.2 billion. The committee said “the minimum tax will render KQ’s operations unsustainable”. In March this year, National Treasury Cabinet Secretary Ukur Yatani exempted the carrier from paying minimum tax, charged at one per cent minimum tax on revenues. The notice was taken to parliament and referred to the Committee on Delegated Legislation, which has recommended that KQ be exempt from paying the tax.

“The Committee recommends that the House approves the said statutory instrument (regulations) in accordance with section 13(2) of the Income Tax Act,” said the report by the committee. The report is among the issues that were up for consideration during the parliament’s special sitting yesterday.

The committee said it had considered the key role played by the carrier in supporting economic sectors such as “marketing of Kenya as a tourism destination, trade facilitation job creation among others”. “It is prudent to grant the exemption from minimum tax to support the firm continue its operations until its returns to profitability,” said the committee chaired by William Kassait.

Macharia Kamau