The Tax Procedures (Amendment) Bill, 2024, currently introduced in Kenya’s National Assembly, seeks to make several pivotal changes to the Tax Procedures Act. If passed into law, this Bill will significantly impact taxpayers and the business environment. Below is an overview of the key amendments and their potential effects:
1. Extension of Tax Amnesty
• Amendment Overview: The Bill proposes to extend the deadline for the tax amnesty on interest and penalties from June 30, 2024, to June 30, 2025. This amnesty applies to taxpayers who have paid all their principal taxes by December 31, 2022.
• Impact: The extension provides taxpayers with an additional year to settle their tax liabilities without the burden of accruing penalties and interest. This move could increase compliance by offering a final opportunity for taxpayers to clear their dues, potentially boosting tax revenues for the government.
2. Relief Due to Difficulty in Tax Recovery
• Amendment Overview: A new provision (Section 37F) is introduced to allow the Commissioner of Taxes to seek approval from the Cabinet Secretary for relief in cases where tax recovery is deemed impossible, unduly difficult, or inequitable. The Cabinet Secretary must publish such reliefs, and present them to the National Assembly.
• Impact: This provision introduces a formal mechanism to address situations where tax recovery is not feasible, thus preventing unnecessary burden on the tax authority and taxpayers. While it offers relief to those genuinely unable to pay, there are concerns about potential misuse or favoritism. Transparency in the approval and publication process will be crucial to maintain public trust.
3. Computation of Time for Lodging Objections
• Amendment Overview: The Bill proposes changes to Section 77 to exclude Saturdays, Sundays, and public holidays from the computation of time for lodging objections and appeals in tax matters.
• Impact: This amendment aligns tax procedures with general legal principles, giving taxpayers more practical time to prepare and lodge their objections. It will likely improve the quality of appeals and reduce the pressure on taxpayers, leading to more effective dispute resolution.
Broader Economic Implications
• For Businesses: The extended amnesty and the introduction of a relief mechanism may alleviate financial strain on businesses recovering from economic challenges, allowing them to redirect resources towards growth and operations rather than tax liabilities.
• For the Government: While the extensions and reliefs may temporarily reduce immediate tax collections, they could improve long-term compliance and collection rates by making the tax system more equitable and taxpayer-friendly.
• For the Economy: By easing the tax burden and creating a more transparent and fair system, these amendments could contribute to a more stable economic environment, encouraging investment and economic growth in Kenya.
Conclusion
The Tax Procedures (Amendment) Bill, 2024, introduces amendments that, if enacted, will have significant implications for taxpayers, businesses, and the broader economy. We shall continue to closely monitor the progress of this Bill and apprise our clients of the potential opportunities, benefits, and challenges (if any) it presents.
This alert aims to inform members of the public about critical changes proposed in the Tax Procedures (Amendment) Bill, 2024. The Andersen team of legal and tax experts remains on standby to assist clients in navigating the prevailing tax and regulatory framework.
Should you have any questions on this legal alert, please do not hesitate to contact our team.
Download the alert here.
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