Finance Bill Seeks to Enforce 7-Day Notice Period for Taxpayers in Tax Disputes

Kenyan taxpayers will have just seven days to file objections to tax assessments if a new proposal in the 2024 Finance Bill is passed. This will be a sharp reduction from the current 30-day window provided under the Tax Procedures Act.

The bill has sparked debate, with some questioning whether a mere seven days is enough time for taxpayers. Gathering evidence, consulting with tax advisors, and formulating a comprehensive objection can be a time-consuming process, and many fear that this new restriction would disadvantage taxpayers.

The current 30-day period already presents challenges, and this proposed change raises concerns about fairness and due process for taxpayers.

The proposed legislation also extends the timeframe for the KRA to respond to objections, giving them 90 days instead of the current 30. This extended period could allow the KRA to conduct a more thorough review of the objection and provide a more informed decision.

The Finance Bill also strengthens the KRA’s position in several ways. The bill grants them broader access to taxpayer data held by banks, telecommunication companies, and other entities. Furthermore, the bill empowers the KRA to waive tax assessments or the recovery of unpaid taxes in specific circumstances. This provision offers some relief to taxpayers facing genuine hardship.

Another noteworthy proposal involves the KRA’s authority to mandate the integration of taxpayer systems with their own. This real-time document submission system could streamline the tax filing process for compliant taxpayers.

The Finance Bill 2024, unveiled in May, aims to raise a substantial amount (Ksh 323 billion) to fund the government’s next financial year, bringing total tax collections to Ksh 2.94 trillion. However, many Kenyans view the proposed measures as an unfair burden, especially considering the recent economic difficulties.

Read Also : How the Proposed Finance Bill 2024 Impacts Your Finances

Public disappointment stems from a perceived contradiction between the bill’s contents and promises made by the Kenya Kwanza government. The new taxes will affect not only businesses and specific sectors like automobiles, beverages, and cigarettes, but also ordinary Kenyans already grappling with financial hardship. These struggles are further amplified by the recent heavy rains that have disrupted livelihoods across various critical sectors.

Everyday essentials like bread will lose their VAT exemption, potentially leading to higher prices. Using mobile money, a vital tool for many, will become more expensive due to a rise in excise duty. This increase extends to airtime and data, further tightening household budgets. Additionally, a new annual Motor Vehicle Tax based on a vehicle’s value will be introduced.

Businesses are not exempt from the tax plan either. The government aims to capture a larger share of the digital economy by imposing a 30% tax on the Kenyan profits of foreign digital service providers. Large multinational corporations will also face a new minimum effective tax rate, ensuring they contribute a fair share to the country’s finances.

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