Frequent change in tax rules not good for business - audit firm

PKF Regional Tax Partner Michael Mburugu. [Elvis Ogina, Standard]

Tax consultancy and audit firm PKF Kenya has opposed numerous amendments to tax regimes during the budget, saying they contribute to the unfavourable business environment in the country.

The firm in its position on tax measures and the country’s economy ahead of 2022/2023 budget reading this Thursday rooted for consistency in tax legislation and management of expenditure.

PKF Regional Tax Partner Michael Mburugu said Kenya needs to urgently adopt a national tax policy to enhance the administrative efficiency of the tax system.

“The unprecedented amendments to the various tax status every year put investors and taxpayers in uncertain situations because they can neither predict what tax changes to expect nor plan for their annual tax affairs,” he said.

Mr Mburugu said an efficient tax system should be hinged on the principles of certainty, ability to pay, convenience and efficiency.

During the briefing, the audit firm highlighted the taxes on petroleum products and liquefied petroleum gas saying they have a huge impact on the economy.

Mr Mburugu said petroleum products attract a significant retinue of taxes such as excise tax, import duty, petroleum development levy, import declaration fee, railway development levy and value-added tax.

“These taxes have a huge bearing on the pricing of these products hence the need to reduce and lower the applicable taxes significantly to protect the economy from an imminent collapse,” said Mburugu.

The Ukraine-Russia war has affected the prices of fuel, cooking gas and steel.

Also affected by the Ukraine-Russia war, is fertiliser which Kenya predominantly imports from Russia, therefore, the high prices.

James Mulili, Senior Tax Manager urged the government to consider implementing a special relief on all taxes applicable on importation and sale of fertiliser to enhance food security.”