Kenyans are outraged and have expressed their displeasure against Members of Parliament (MPs) after National Assembly pass motion by the Committee on Delegated Legislation exempting Japanese companies and employees from income tax amid country’s struggling economy.
The Committee on Delegated Legislation, chaired by Tiaty MP William Kamket has recommended, in a report to the house, the exemption from income tax of Japanese companies, employees and consultants working on projects agreed upon between the government of Kenya and Japan.
“The policy and requirement of the government of Japan are to have Japanese companies, consultants and employees involved in the implementation of any project financed by the government of Japan, exempted from tax,” Kamket told the House.
The notice for exemption was first issued by Treasury Cabinet Secretary Ukur Yatani in February this year, for Japanese nationals undertaking projects in Kenya.
Section 13(2) of the Kenyan Constitutions allow Yatani to exempt certain activities from taxation and the notice must be published in the gazette and must be submitted to the National Assembly.
“Cabinet Secretary for National Treasury and Planning directs that the income which accrued in or was derived from Kenya by Japanese companies, Japanese consultants and Japanese employees involved in the projects…. shall be exempt from income tax….,” he directed.
Section 13(2) of the Kenyan Constitutions allow the Treasury CS to exempt certain activities from taxation and the notice must be published in the gazette and must be submitted to the National Assembly.
The President of the Law Society of Kenya, Nelson Havi tweeted that,” the National Assembly exercises oversight over national revenue and expenditure. Not so long ago, your MP increased your tax burden. KRA will de register your PIN now that you cannot pay taxes. Today, your MP has exempted Japanese companies and individuals from income tax.”
Defending the National Assembly decision, Majority Party Leader Amos Kimunya stated that Kenya had already agreed on the income tax exemption.
“Parliament is only ratifying what was already agreed as a condition of being given a grant. The logic is clear, if the Japanese government is to give Kenya a certain amount as a grant or as a concessional loan, you cannot then seek to profit from the same grant by taxing the services that are being provided as part of the operationalisation of that grant by Japanese companies,” he explained.
Currently, Japan is undertaking at least 15 projects in Kenya worth over Ksh328 billion.
Among the projects being undertaken by Japanese contractors including Olkaria V Geothermal Power Development Project which cost Ksh66.9 billion and Ksh38.2 billion Mombasa Special Economic Zone Development Project.
Others include the first and second phases of the Mombasa Port Area Road Development Project (Ksh29 billion) and the first phase of the Mombasa Port Development Project (Ksh22 billion).
In the country, income tax is charged annually on income accrued in or was derived from the country by residents and non-residents.