Stop double taxation, Kenyan counties told

The Transition Authority has asked counties to stop levying some fees that have seen companies exposed to double taxation.

In its advisory opinion dated December 2015 on levying of taxes, fees and charges by county governments, the authority said it has over the transition period received several complaints on the charges and fees levied by the county governments.

“The complaints have been on vehicle branding fees (classified as outdoor advertising), charges on goods on transit, and other fees and charges implemented through certification, inspections and permissions,” the letter signed by Transition Authority Chairman Kinuthia Wamwangi to the 47 county chiefs read in part.

The authority notes the business community contend that some of the fees and user charges amount to double taxation and are in breach of the Constitution and Public Finance Management Act, 2012. It further says the double taxation is detrimental to the national economic interest.

The Constitution allows the national government to impose income tax, value-added tax, customs duty and other duties on import and export goods.

The national government is also allowed to levy excise tax, user fees and charges for the services it provides and any other taxes authorised by an Act of Parliament.

The county governments are allowed to impose property rates, entertainment taxes, user fees and charges for services they provide and any other tax authorised by an Act of Parliament.

The Constitution further requires that the taxation and other revenue-raising powers of a county government shall not be exercised in a way that prejudices national economic policies, economic activities across county boundaries or the national mobility of goods, services, capital or labour.

The authority argues international best practices provide that a State, county or local authority should not levy charges on advertisements within buildings or locomotives like trains, trailers and vehicles and on the locomotives in the forms of branding as the charges on such cannot be linked to a specific service offered by the governments.

“Also sign boards showing direction or names on shops or businesses should not attract charges as they are not linked to a specific service,” the letter says.

Mr Wamwangi says the national government has signed several International Trade Protocols and Agreements and notably with the East African Community to allow for ease of movement of goods, services and labour across the member countries.

“The international protocols and agreements are applicable across the Republic of Kenya and therefore should be adhered to by the county governments as they endeavour to raise their own revenue to fund  their operations,” the letter reads.

The authority says goods in transit have been taxed by the national government and  should not be taxed again by the county governments.