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CS Ukur Yatani Targets Loss Making Companies In New Tax Proposal

CS Ukur Yatani [Photo/Courtesy]

National Treasury Cabinet Secretary Ukur Yatani has a proposed a new tax measure aimed at ensuring that loss-making companies contribute to the national revenue.

Speaking at the National Assembly during the 2020/2021 budget reading, the CS stated that there is need to tax the companies as they enjoy government facilities.

The CS proposed a minimum tax payable by all companies at the rate of 1 per cent of their gross turnover.

“Some losses year in year out, hence not contributing to the exchequer in terms of tax revenue. However, these companies enjoy facilities such as infrastructure whose cost of construction and maintenance is service by the government through tax revenues contributed by other patriotic taxpayers, ” said Yatani.

“To ensure all taxpayers contribute to the maintenance of our infrastructure, I propose to introduce a minimum tax that will be payable by all companies at the rate of 1% of their gross turnover.

A section of Kenyans has, however, criticised the proposal saying it could cripple startups if implemented.

Read: CS Yatani Allocates Sh10 Billion To “Kazi Mtaani” Youth Programme

While tabling the Ksh2.7 trillion budget, CS Yatani also proposed that the threshold for rental income tax be revised upwards to Ksh15 million per anum from Ksh10 million.

The CS proposed a three-year voluntary disclosure programme to allow Kenyans who made ommissions in tax returns in the last five years to pay dues owed without interest and penalties.

To maximize the government’s revenue, Yatani proposes introduction of digital service tax on value of transactions at the rate of 1.5 per cent. The tax targets online businesses that have not been paying taxes.

In the budget that was presented in parliament under the unique Covid-19 pandemic circumstances, Yatani said that the government has set aside Ksh10 billion to support unemployed youth in the country under the the ‘Kazi Mtaani’ programme.

Read Also: KRA To Tax You For Downloading Mobile Apps In New Proposals

The programme was launched by the President Uhuru Kenyatta on April 25 to support youth in targeted slum areas in eight counties.

The effects of the novel coronavirus on the economy saw the number of unemployed youth rise as many companies shut down with others scaling down operations.

The programme was first rolled out in 28 slums in Kiambu, Nairobi, Mombasa, Kwale, Nakuru, Mandera, Kilifi and Kisumu.

Read Also: How To File Your 2020 KRA Tax Returns

At the same time, the CS said the government is determined to clear all pension payments backlog by the end of the year.

“The National Treasury is re-engineering and upgrading the pension system to clear all pension payments. This will guarantee smooth transition of retirees from a monthly salary cheque to monthly pension payment,” he said.

“To reduce the burden on pensions, we will roll out staff own contributions plan in the next financial year.”

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Written by Wycliffe Nyamasege

Just email news@kahawatungu.com

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