The National Assembly’s departmental committee on Finance and National Planning has begun the process of collecting views from the public and experts over the proposed National Tax Policy.
The proposed policy is set to provide guidelines to the country’s tax and tax administration reforms in the medium term.
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It also geared towards articulating broad guidelines for governing tax administration and the tax system in Kenya
The implementation of the interventions caused by the policy is also expected to increase the tax to Gross Domestic Product ratio to the desired East African Community (EAC) target of 25%, thereby raising sufficient resources to support the government’s development agenda.
First to appear before the committee was the Institute of Certified Public Accountants of Kenya led by the chairman Phillip Kakai.
The team told the committee that the proposed policy is a great step in realizing the country’s dream of having an efficient and fair tax system.
This, they said, will help promote equity in tax administration and a predictable tax environment for businesses to operate as frequent changes to the tax law challenge the principles of certainty and simplicity.
They observed that the more changes are made, the greater the difficulty taxpayers, practitioners and government administrators have in complying with and understanding the tax consequences of transactions.
Some of the challenges in the current tax system that ICPAK cited as requiring reforms include the lack of precision in the identification of taxpayers due to lack of an integrated mechanism that identifies all taxpayers and limited access to taxpayer transactional information given that Kenya currently operates a self- assessment system for income tax purposes.
To broaden the tax base and enhance compliance in Kenya’s tax system, ICPAK has proposed the need for the Kenya Revenue Authority to leverage on technology and data management to identify potential taxpayers.
They suggest that every legal person be issued with a personal identification number (PIN) to keep proper books of accounts for tax determination.