Manufactures complain over omission of corporate tax relief in Bill

Manufacturers have launched complain over the omission of tax relief on corporate earnings in the emergency Bill set for debate by lawmakers next Tuesday.

According to the firms, the omission will keep the cost of operation high despite the ravaging impact of COVID-19.

“Despite the President’s directive to reduce corporate tax for companies from 30 percent to 25 percent, the Bill failed to do so by omitting the percentage to facilitate the reduction,” Kenya Association of Manufacturers (KAM) says in a letter to Mr. Yatani.

The fact that the Tax Laws (Amendment) Bill 2020, presented to the National Assembly by Treasury secretary Ukur Yatani, does not contain the relief on corporate income tax, meaning Mr. Kenyatta’s proposal will not have a legal backing unless the legislators include it through amendments.

“The move and timing of the introduction of the now-COVID related fiscal measures by the government, is ill-timed due to the current coronavirus crisis that has and is expected to further have severe effects to the country and global economy,” says KAM Phyllis Wakiaga.

If approved by the Bill is approved by the MPs, large factories will lose the 30 percent rebate on electricity bills and the lower 15 percent corporation tax for those in plastics recycling. Factories making medicines and agricultural inputs as well as ordinary bread will also not claim a refund of input value-added tax after Mr. Yatani proposed to remove them from zero-rated to exempt commodities.

The manufacturing will be among the sectors, which will be hardest hit by additional changes to the law contained in the COVID-19 Tax bill.

“Arising from the above, this letter is to, therefore, request you to urgently instruct the National Assembly to only debate the COVID-19 fiscal measures in the Tax Laws (Amendment) Bill 2020 directed by the President on 25th March 2020 to mitigate the Corona Virus pandemic facing the country.”