Taxman sets deadline for public views
The Kenya Revenue Authority (KRA) has set a deadline of December 28th for traders and Kenyans to submit comments on the Income Tax (Turnover Tax) Regulations 2023 and the Tax Procedures (Electronic Tax Invoice) Regulations 2023.
This is after widespread public debate and concerns about the potential impact of these two contentious draft regulations on businesses, particularly those operating at a loss.
The Income Tax (Turnover Tax) Regulations 2023 became a focal point of controversy, with many Kenyan businesses expressing apprehension over the proposed changes, saying it will make traders be liable even when they make losses.
May harm companies
Experts and critics argue that the turnover tax, which is designed to be a simplified tax system for small businesses, may inadvertently harm companies operating with losses. The fear is that such businesses, already grappling with financial challenges, may find it burdensome to comply with the new tax structure.
Further, concerns have been raised about the potential stifling effect on entrepreneurship and innovation. Critics further argue that imposing a turnover tax on businesses with low or negative profit margins may deter investment and hinder the growth of emerging enterprises.
The second draft regulation under scrutiny is the Tax Procedures (Electronic Tax Invoice) Regulations 2023. While the move towards electronic tax invoicing is generally seen as a positive step towards modernization and efficiency, some segments of the business community have voiced reservations.
Questions have also been raised about the readiness of businesses, especially smaller ones, to transition seamlessly to electronic invoicing systems. There are concerns about the potential initial costs and training required for businesses to adapt to the new procedures.
“In compliance with the Statutory Instruments Act of 2013, the commissioner general on behalf of of Treasury Cabinet Secretary invites members of the public and stakeholders to submit their comments for consideration in finalising the above regulations,” said KRA commissioner general Humphrey Wattanga in a statement in the dailies.
KRA’s willingness to engage with the public underscores the importance of collaborative policymaking in fostering a business environment that supports growth and sustainability.