The Finance and National Planning Committee has rejected attempts to create an all-powerful Kenya Revenue Authority (KRA) by dropping three proposals by the Treasury to strengthen the taxman’s armour.
In fresh amendments to the Finance Bill, the KRA Commissioner General is set to lose proposed powers to require taxpayers to deposit 20 percent of disputed tax amounts for cases filed at the Tax Appeals Tribunal.
Equally, taxpayers will be unrestricted in amending pleadings filed against the taxman at the Tax Appeals Tribunal or in courts as MPs shoot down the introduction of restrictions on new grounds of appeals.
MPs have similarly voted down proposals to increase penalties on tax shortfalls to double the deficit amount from the current penalty of 75 percent.
Equally, the KRA boss will still be required to notify the taxpayer of the intention to register a security against their property, contrary to earlier proposals that would have seen KRA attach the taxpayer’s properties without serving notice.
The requirement of a 20 percent security deposit by a party to a dispute with the taxman faces the steepest opposition with proponents arguing the provision would limit access to justice and reduce the working capital of business entities.
“The proposed provision is a limitation of taxpayers’ access to justice and their right of appeal. A party unable to make the payment within the tight appeals timelines would be forced to forgo their right to appeal,” representatives from PwC told the Finance committee.
Passing the provision would likely result in a petition to the courts with the Supreme Court having cautioned against the introduction of similar hurdles.
In a similar rejection, the High Court in 2020 issued conservatory orders against a comparable provision in the Public Procurement and Asset Disposal Regulations, which would have seen the introduction of a security fee prior to the filing of a review at the Review Board and an appeal at the High Court.
The KRA has also lost a bid to collect tax withheld by a tax agent within three days with changes pushing the period of remittance to five days.
The proposals in the Bill had been seen to be the polar opposite of a government formed by a party that during the election campaigns sold a friendlier taxman.
Nevertheless, the taxman is set to retain some firepower having the room to chase down tax demands to the end.
The proposal has nevertheless been assessed as punitive to taxpayers with tax experts warning of the emergence of a ruthless KRA.
