ICPAK urges Parliament to end tax disputes in counties

Institute of Certified Public Accountants national chairman Fernandes Barasa. PHOTO | WILLIAM OERI 

In Summary

• ICPAK has further urged Government to urgently improve efficiency in public spending by ensuring high absorption of the national budget both in counties and nationally.
• “The tax penalties are also quite high. For instance, failure to register for tax attracts a penalty of Sh100,000 per month during the period which one is not registered when they should have been registered,” said Ms Mugo.

By YVONNE KAWIRA
More by this Author

Accountants have called for speedy enactment of tax legislations such as the Tax Procedures Bill 2014 so as to settle resolution on tax disputes especially in county governments.

During a meeting to review the national budget, they noted that there are disputes emerging from irregularities in tax collection at the county level. For instance, in Kitui traders have sued the county over a law seeking to increase taxes.

“To maximise on the ongoing tax reforms, there is need to fast-track the enactment of tax legislations such as the Tax Procedures Bill and review of the Income Tax Act to give effect to programmes intended to reform tax administration,” said Institute of Certified Public Accountants national chairman Fernandes Barasa.

The new bill is aimed at making uniform the procedures across three tax legislations; Value Added Tax, Excise Duty and Income Tax.

While reading the national budget 2015/2016 National Treasury Cabinet Secretary Henry Rotich said it will make tax administration easier as it reduces the cost of compliance.

Ernst&Young- Kenya associate director of international tax and transfer pricing services Jemima Mugo however believes that the bill will empower the Commissioner to issue an advance assessment without referring to a self-assessment report (tax return).

TAX PENALTIES

“The tax penalties are also quite high. For instance, failure to register for tax attracts a penalty of Sh100,000 per month during the period which one is not registered when they should have been registered,” said Ms Mugo.

ICPAK has further urged Government to urgently improve efficiency in public spending by ensuring high absorption of the national budget both in counties and nationally.

Mr Barasa said if the national budget is well used, government will meet its focus on building a strong revenue base and containing growth of expenditure.

“According to the Controller of Budget Third quarter Report for 2014/15, expenditure by Ministries, Departments and Agencies (MDAs) in the first nine months of the financial year 2014/15 amounted to Sh996.1 billion, representing an overall absorption rate of 62.3 per cent,” said Mr Barasa.

The institute said that the average absorption rate of development expenditure should be Sh229.8 billion representing a rate of 47 per cent. Counties cumulatively spent below the target at Sh117 billion as recurrent expenditure.

“These figures indicate that strategies should be formulated, by both the national and county governments, to ensure that absorption of development funds is enhanced,” said Mr Barasa.