Committee approves tax relief for Japanese projects, consultants
Mercy Mwai @wangumarci
National Assembly’s Committee on Delegated Legislation has approved the exemption from income tax Japanese companies, consultants and employees involved in the implementation of 16 projects countrywide.
The committee said four of the 16 projects are financed through grants, while the rest are financed through loan agreements.
Chaired by Tiaty MP Kassait Kamket, the committee said the exemption is in respect of income accrued or derived from Kenya by Japanese companies, consultants and employees who are involved in the project under the financing agreements signed between the Government of Kenya and the Government of Japan.
“Having examined the legal notice number 15 of 2021 in accordance with the constitution of Kenya, the interpretations and General provisions act (cap2) , the Income tax act (cap 470) an the statutory instruments , the committee recommends that the house approves the said statutory instrument in accordance with section 13 (2) of the income tax (cap470),” reads the committee recommendations in part.
According to the committee, although this is not limited to Kenya, this is the requirement by the government of Japan for all financing agreements between the government of Japan and any other government.
“ All agreements signed between the Japanese government and the government of Kenya contains this exemption,” added the report.
Francis Kamau, a tax expert and partner at Ernest Young says such a move is within the law and very legal.
“When these countries give out loans, they give such a conditionalities. This was one of them. It must be approved by Treasury and Parliament,” he said.
Blanket move
“Under Section 13(2) of income tax Act, government can wake up and do that. It is normal, but the problem is that it looks like a blanket move, when people think it is being favoured,” he said.
While defending the move, National Treasury Cabinet Secretary Ukur Yatani told the legislators that the overall benefits to be derived from effective and efficient implementations of the projects outways the tax foregone.
In addition, he also said that the income from jobs created from the projects and the income derived from the expenditure on the said projects generates revenue that is far above the tax foregone as a result of the exemption.
