Finance Bill: MPs open public participation window

Kimani Kuria - Chairperson, Parliamentary Committee on Finance and National Planning speaking during a public dialogue on the Post-Tax Amendment Laws Analysis Forum in Nairobi. [File,Standard] The National Assembly has opened a window for Kenyans to give their views on the Finance Bill 2025. Individuals, businesses and lobbies have until May 27 to submit written views on the bill by hand to the office of National Assembly's clerk or write an email to the clerk or the Departmental Committee on Finance and Planning. Additionally, the department is also expected to hold in-person meetings with some of the players for further feedback. This is even as Kenyans watch what the MPs will do with their submissions. There have been concerns that public participation forums are aimed at meeting constitutional requirements and feedback is rarely taken in consideration. It is these concerns that spawned the countrywide anti-government protests with Kenyans feeling their concerns that the proposals contained in the Finance Bill 2024 would make life more unbearable were not considered in the final Bill. The demonstrations, which were led by young Kenyans, later turned deadly as police unleashed brute force on protestors, including firing live bullets, killing some. The Bill, which the government has been pushing as "no taxes Finance Bill", has avoided making proposals for new tax measures. "The Bill contains proposals relating to revenue-raising measures, including provisions to ease tax administration and clean up the statute book of terms and cross-references to provisions that have previously been repealed," said the Clerk National Assembly in calling Kenyans to submit their views on the Bill. Despite not introducing new tax measures, the Bill contains some clauses that could see a spike in the cost of living. Such include removal of some materials from the list of goods that are VAT zero rated to list of goods that are VAT exempt, which could see an increase in cost of some goods. "I do not think this Bill has addressed the issue of disposable income or money left in your pocket. What the Treasury has done in this Bill is that it has also not increased tax rates. But at the same time, they want to collect Sh175 billion through measures that they will introduce in the bill. There is no real direct impact in terms of taxes save for a few instances," said Alex Kanyi a partner at Cliffe Dekker Hofmeyr (CDH), speaking yesterday on Standard Group's Spice FM. He added that this year's bill is unlikely to face resistance witnessed last year especially among MPs. "It will have an easier time compared to Finance Bill 2024." Among the items that the Finance Bill has proposed to migrate from the list of zero rated items to that of VAT exempt goods are inputs used by pharmaceutical manufacturers to produce medicaments, transportation of sugarcane from farms to milling factories, motorcycles, electric bicycles, solar and lithium ion batteries, electric buses, raw materials for manufacture of animal feeds and bioethanol vapour (BEV) stoves. In explaining the different VAT exempt and zero rated, analysts note that zero rated supplies are cheaper as manufacturers are allowed to claim a refund on input tax. Exempt supplies, on the other hand, are not taxable and any related input tax is therefore not deductible. This might mean that producers pass tis cost to customers. The Bill has also proposed the removal of certain goods from the list of VAT-exempt supplies, which will attract VAT at the standard rate of 16 per cent if the proposals sail through as they are. Through what has been termed as a clean up of the different tax acts, the Finance Bill is expected to help the government raise Sh175 billion in additional revenue. Parliamentary Budget Office, which advises MPs on the budget and other fiscal matters, noted that expunging some items from the zero-rated list and moving them to exempt side is aimed at stopping abuse of the VAT refund process "The Bill proposes tax on goods or services that were initially exempt or zero-rated if later used inconsistently with their intended purpose. This aims to curb abuse of VAT reliefs and protect revenue. While it helps close tax evasion gaps, concerns remain about how fairly and transparently misuse will be determined," said PBO in a new brief on the Finance Bill. The Finance Bill 2025 has also proposed to give the Kenya Revenue Authority (KRA) through review of the Tax Procedures Act, what has been interpreted as giving the taxman unfettered powers to snoop into companies' data. The proposal was also contained in last year's Finance Bill. "The Bill opens the backdoor to unprecedented data access, reviving last year's controversial push and blurring the line between tax enforcement and data privacy, leaving businesses and individuals exposed," said PBO. Kanyi explained that while businesses are required to integrate their systems with those of KRA. This gives KRA a view of operations to the extent that it can determine where a firm is paying taxes that tally with its production. He however noted what the Finance Bill proposes. "There has been a limit such that KRA can access a system but cannot access trade secrets and personal data. The Bill has proposed to remove these limitations and give KRA access to everything," he said.

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