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What you need to know on estate duty tax currently in the spotlight

 Parliament passed a law repealing the Estate Duty Act (Cap 483) in 1982. [iStockphoto]

President William Ruto's claim that some wealthy individuals are sponsoring street demos to avoid paying taxes has opened a new battleground with politicians and government officials from the former administration of Uhuru Kenyatta, who view the new crusade as a witch-hunt.

"We cannot continue to operate in a space where those in power exempt themselves from paying taxes," said President Ruto last week.

"Their day is up. Every citizen must pay taxes. Even if they sponsor demos so they don't pay tax, they will pay, I am not talking about additional taxes, I am talking about taxes that have been signed into law."

The remarks kicked off a flurry of reactions across the political divide with politicians taking sides.

Last week, Azimio Party leader Raila Odinga said calls to tax former President Uhuru Kenyatta and the estate of his father, Mzee Jomo Kenyatta was ill-advised and had no basis in law.

"When we got independence, there was a law that exempted the president from paying taxes during the succession of his property," said Mr Odinga.

"That law was drafted in 1963 and enacted in 1969 and exempted Mzee Kenyatta's estate and when President Moi came into office, he added the Moi Estate to the exemption list in 1981."

Former First Lady Mama Ngina Kenyatta also waded into the topic over the weekend, stating that the government has mechanisms in place to deal with tax evaders.

"I hear a lot being said about some people not paying taxes...the government has a procedure of doing things and income taxes are compulsory for all citizens depending on their earnings," she said.

"That is not an issue to discuss in the media because if you do not pay your taxes, you are taken to court or you are auctioned. There is no need to politicise this or spread falsehoods."

According to records from the Judiciary, The Estate Duty Act Cap 483 was commenced on June 12, 1963, and enacted on August 7th of the same year.

The Act stipulated the appointment of an Estate Duty Commissioner who was charged with collecting all estate duties and interest payments. "The Minister may appoint a Deputy Estate Duty Commissioner and a such number of Assistant Estate Duty Commissioners as the Minister thinks fit," explains the Act in part.

Section 7 of the Act goes into detail on the property and assets that are liable for payment of estate duty during the succession process.

Whenever any person dies after the commencement of this Act, a tax known as Estate Duty shall, save as is hereinafter provided, be levied and paid on; all property of which the deceased was at the time of his death competent to dispose of; all property in which the deceased or any other person had an interest ceasing upon the death of the deceased.

Estate duty was also levied on all property which immediately before the death was held for the use or enjoyment of two or more persons of whom the deceased was one as well as the proceeds of any insurance policy.

The Estate Duty levy would be payable within three years immediately preceding the death of the deceased and would only be charged once. Section 7(c) indicates that the Estate Duty tax exempts Mzee Jomo Kenyatta's estate and that of his successor Daniel Arap Moi.

"This section shall not apply to His Excellency Mzee Jomo Kenyatta nor to His Excellency Daniel arap Moi," states the clause.

Charitable donations

Certain gifts were also exempted from paying the Estate Duty. These included gifts made in consideration of marriage and any charitable donations made more than one year before the death of the deceased.

"No Estate Duty shall be payable on any property situated outside Kenya at the time of the death of the deceased unless it is movable property," states the law in part.

Property donated to the public or that which the deceased held by virtue of his office was also exempted from Estate Duty.

"No Estate Duty shall be payable on any property which has borne Estate Duty on the prior death of the husband or wife of the deceased," reads another exemption in part.

In 1982 Parliament passed a law repealing the Estate Duty Act (Cap 483).

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