YVONNE'S TAKE: Beware, a minefield of taxes lies ahead in the Finance Bill

[Music]

over the last few days we have been

inundated with debate over the housing

fund we have discussed its pros and cons

is it a tax or a saving who gets a house

who doesn't

get me wrong it's important

but let us not lose sight of many other

Provisions in the bill

that deserve our attention

I will sample a few and my list is by no

means exhaustive for a start the bill

proposes to charge 16 percent VAT on

insurance compensation

so basically this is the money that is

paid to one after injury or loss or

damages

Insurance compensation basically aims to

restore one to their original state

following loss or damage

it is not a profit making exercise

so basically you get hit by a bus and

you will have to pay taxes on your

compensation

further there is a proposal to charge 20

excise duty on mobile and internet data

in a country that is touted as going

digital and encouraging the use of

online spaces don't forget this is the

same government that says they have

digitized over 5 000 government services

you see you apply for a passport online

your driver's license your certificate

of Good Conduct amongst many others this

will no doubt widen the digital divide

further the cost of mobile phones

themselves could increase due to

increase in tax on imported phones now

one would argue that this will help

local producers

the problem though is we really don't

have that many local Alternatives how

many companies actually make mobile

phones locally

Kenyans still rely heavily on imported

gadgets this will make gadgets

unaffordable for many even at a time by

the way when we're expecting Farmers to

get extension services via their phones

in addition that bill also aims to

charge 12 percent on mobile money

transfers

and then of course there is a proposal

to increase the vat on fuel products

from 8 to 16 percent this will have a

ripple effect on the cost of just about

everything else in the country

now the finance bill 2023 wants to amend

the income tax act with respect to turn

of attacks

now this tax was controversial even when

it was first introduced in the previous

administration as it seeks to charge

taxes on turnover rather than profit

but back to present day this amendment

proposes to Target a greater number of

smaller businesses you see initially it

targeted businesses with a turnover of

between 1 million and 50 million

Shillings

but now it has moved that bracket to

Target those making between just half a

million Shillings and 15 million

Shillings every year

now this just means that many more

smaller businesses would be subject to

this three percent tax now remember this

is at a time when focus is largely on

the SME sector that is touted as the one

that will drive economic growth

particularly as we recover from the

global covid-19 pandemic

now if you're a farmer listen up because

the price of fertilizer could go up if

this bill is passed

this is because the proposal is to

reclassify fertilizers from zero rating

to exempt vat supplies what this

basically means is that it is the

manufacturers who will bear the cost

meaning they could decide to pass on

that cost to you

the farmer when you go to buy the

fertilizer

business owners are also worried lot

when it comes to how they will handle

disputes with a tax collector KRA you

see the bill is proposing that anyone

who has a dispute with the Kenya Revenue

Agency and challenges them before the

tribunal will have first have to pay 20

percent of the amount under dispute

before they can even file the appeal

but that this amount would be refunded

if the Challenger wins the suit against

Kerry now business owners are saying

this is too high an amount to pay before

the disputes even heard or decided in

fact one wonders why anyone has to pay

any amount at all

now sometimes these disputes take a long

time as you know to be decided you know

in a court process and that means that

once money is held up for quite some

time while the murder is being hired and

determined

furthermore that proposal goes against a

Court ruling on the very same issue in

which deputy chief justice Philemon said

there should be no such preconditions

before a dispute is heard and determined

she said and I quote it is unreasonable

as it impedes the appellant's access to

Justice by imposing a condition

precedent before a matter can be heard

contrary to articles 48 50 and 159 of

the Constitution of Kenya end quote

so ladies and gentlemen if you're a

farmer or a content creator who will now

have to pay 15 percent of taxes on your

earnings if you're a consumer who uses

public transport drives a car

a salaried Kenyan who will have to pay

more in the housing fund consumer of

goods and services

pay attention to the contents of the

bill

as one popular show host in this country

says

there is something for everyone

that's my take tonight