PKF Kenya has today released its position on tax measures and the position of the economy of Kenya ahead of the 2022/2023 budget reading on Thursday.
According to Michael Mburugu, Regional Tax Partner PKF, Kenya needs to urgently adopt a National Tax Policy to enhance the administrative efficiency of the tax system and provide consistency and certainty in tax legislation and management of expenditure.
“The unprecedented amendments to the various tax status every year put investors and taxpayers in very uncertain situations because they can neither predict what tax policy changes to expect nor plan for their annual affairs.”
According to Mburugu, an efficient tax policy system should be hinged on the principles of certainty, ability to pay, convenience, and efficiency.
During the briefing, the audit firm highlighted the taxes on petroleum products and liquefied petroleum gas. James Mulili noted that the cost of petroleum products and liquefied petroleum gas is likely to rise sharply due to disruptions caused by the Ukraine-Russia war.
“Petroleum products attract a significant retinue of taxes such as excise tax, import duty, petroleum development levy, import declaration fee, railway development levy and value-added tax. These taxes have a huge bearing on the pricing of these products hence the need to reduce and lower the applicable taxes significantly to protect the Kenyan economy from an imminent collapse,” said Mburugu.
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Also affected by the Ukraine-Russia war, Kenya imports its fertilizer predominantly from Russia, therefore, the rising prices of fertilizers have been hampered by the Ukraine – Russia war.
According to James Mulili, Senior Tax Manager: “To cushion farmers from the high cost of fertilizer, the government should consider implementing a special relief on all taxes applicable on importation and sale of fertilizer to enhance food security”.
The audit firm also urged the government to put in place measures to cushion citizens and the economy from the high cost of basic foodstuffs such as maize, wheat, soya meal, and rice.
“Kenya is a net importer of grains and with the Ukrainian situation persisting, the cost of importing these essential foodstuffs for both human and animal consumption will become a challenge. There is, therefore, a need to reduce and lower taxes applicable on importation and sale of these basic foodstuffs to make them affordable,” added Mulili.
Some years back, the government imposed a ban on the importation of genetically modified foodstuffs for both animal and human consumption against globally accepted research that has proved that GMO products are safe.
Amid the impending global short supply of Non-GMOs, Managing Partner, Ritesh Mirchandani urged the government to re-think this position to allow the importation of GM food for both animal and human consumption – typically, GM foodstuff is cheaper in the international markets hence allowing its importation will help manage the ballooning import bill and ensure food security.
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“Currently, famine is ravaging the Northern frontier counties with many families going without food and water for days. An urgent lifting of the ban on GMO foodstuff will help alleviate the famine disaster,” noted Mirchandani.
According to Alpesh Valdher Chief Executive Officer of PKF East Africa: “The region is recovering from the adverse effects of the pandemic.”
With the Democratic Republic of Congo becoming the seventh member of the East African Community, the firm also acknowledges that the EAC is already viewed as the most vibrant in Africa as the move will make the bloc even more appealing to investors.
