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Suspension of tax relief by KRA to be sustained into the future, says CS

Thursday, March 9th, 2023 05:41 | By
KRA chair Anthony Mwaura. PHOTO/Courtesy

National Treasury has said suspension of tax reliefs by Kenya Revenue Authority (KRA) will continue in the foreseeable future until the process is clearly streamlined.

Cabinet Secretary Njuguna Ndung’u said the initiative will focus on ensuring avoidance of eroding the tax base, or creating distortions in the economy and achieve intended objectives of tax policy.

“The changes will also ensure fairness, equity and effectiveness in the implementation of the legal tax provisions,” he said in a statement.

The CS said while the tax reliefs can have some positive impacts on the economy, they can also have negative consequences through abuse of the process.

He clarified that the refunds, which relate to abandonments and to any payments of disbursements have not been scrapped, neither was it a change in policy or the intent of the law. Tax reliefs/ Incentives, broadly categorised as exemptions, refunds, waivers and abandonments are policy measures used by the government to encourage economic activities and attract investments.

Late last month, the taxman suspended the waivers to allow for audit of tax relief rules, amid concern that the agency has granted incentives totaling Sh610 billion since 2018 and growing concern by President William Ruto’s administration on growing government expenditure.

KRA chairman Anthony Mwaura (pictured) said the ongoing review is aimed at increasing the impact of tax expenditure on economic growth through minimising tax expenditure and aligning it with international best practice for better internal revenue.

The measures are expected to lead to lead to a permissible issuance of tax exemptions and ensure equitable processing of tax reliefs
Mwaura said the improvement in tax relief processes and procedure is part of the aggressive revenue mobilisation plan to enhance revenue collection and redirect resources to finance priority growth -supporting programmes.
– Noel Wandera

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