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MPs shield some players from tax on cash transfers

By Otiato Guguyu | Published Tue, August 28th 2018 at 00:00, Updated August 27th 2018 at 19:41 GMT +3
If the MPs have their way Individuals with multiple bank accounts will also be spared the 0.05 charge while moving money from one account to another. [Wilberforce Okwiri, Standard]

Parliament wants some taxpayers shielded from the so-called Robin Hood tax proposed by the National Treasury.

The National Assembly’s Finance Committee, in proposed amendments to the Finance Bill 2018, has sought to exempt some transactions from the 0.05 per cent tax on money transfers amounting to Sh500,000 and above while giving Cabinet Secretary Henry Rotich a free hand to make any other exemptions.

“...does not include any other category of money transfer that the Cabinet Secretary may specify through a gazette notice,” reads the Finance Bill.

To safeguard national revenue, the committee has proposed that money emanating from taxes collected by the Kenya Revenue Authority and deposited at the Central Bank be exempted from the new levy.

Should the watchdog committee’s proposals be adopted by the larger House, all transactions of Sh500,000 and above relating to the payment of tax will be spared from the dreaded measure.

Lose money

In his budget speech, CS Rotich made a case for the implementation of the tax, saying the levy would be used to fund free health care for all, which is one of the pillars of President Uhuru Kenyatta’s Big Four agenda.

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The Finance and National Planning Committee has also sought to protect trade at the Nairobi Securities Exchange, proposing that sale and purchase of shares should not attract the charge.

The proposed tax has caused a decline in capital market trading as investors fear they will lose money from multiple ticket transactions.

Capital Markets Authority Chief Executive Paul Muthaura said investors had postponed decisions to get a clarification on the proposed law. The Kenya Bankers Association last month filed a suit in court challenging the implementation of the new tax.

“The nature of the business is that you have multiple legs of transactions,” Mr Muthaura told The Standard.

“For instance, a collective investment firm or a pension firm wants to buy a government bond; they will need to call the money, move it to a custodian then invest it and incur the transaction costs on each level,” he said.

The other category to be exempted from the tax should the committee’s proposals be adopted is the transfer of cash between accounts belonging to the same person to avoid the punitive nature of the law.

 


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