National Assembly eyes lifeline for struggling businesses through Tax Relief Bill » Capital News

NAIROBI, Kenya Dec 3 – The National Assembly has turned its attention to the Tax Procedures (Amendment) (No. 2) Bill, a legislative proposal aimed at easing the financial strain on businesses owed billions by government agencies while also enhancing revenue collection for the state.

The bill, championed by Majority Leader Kimani Ichung’wah, offers a one-year tax amnesty to businesses, shielding them from penalties and interest on unpaid tax liabilities until June 30, 2025.

During the debate, Ichung’wah emphasized the critical role the bill plays in addressing liquidity challenges faced by businesses across the country.

Many businesses, ranging from small-scale traders to major contractors, have been crippled by delayed payments from government ministries, departments, and county governments.

Despite these delays, they remain liable for Value Added Tax (VAT) and income tax obligations, often accruing hefty penalties and interest when unable to meet deadlines.

“This bill is a lifeline for millions of businesspeople who have invoiced the government and are now in financial distress due to unsettled payments,” Ichung’wah noted.

“By waiving penalties and interest, it creates an environment where businesses can settle their principal tax liabilities without additional financial burdens.”

Benefits for Businesses

Under the proposed law, businesses will be granted a grace period to address their tax arrears without facing punitive measures.

This is expected to free up much-needed liquidity for reinvestment in operations, fostering business growth and job creation.

“The penalties and interest have placed an insurmountable burden on many entrepreneurs,” Ichung’wah said. “Contractors and traders owe hundreds of millions in penalties and interest alone. This bill provides them a fair opportunity to get back on track.”

The tax amnesty is particularly vital for businesses caught in limbo due to pending bills that are yet to be verified or cleared by government processes.

The relief is expected to rejuvenate these enterprises, enabling them to contribute more effectively to the economy.

A Win-Win for Government and Taxpayers

The proposed amnesty also benefits the Kenya Revenue Authority (KRA) by encouraging prompt payment of principal taxes.

According to Ichung’wah, taxpayers are more likely to settle their dues when the penalties and interest are waived.

This not only increases compliance but also ensures that government revenue streams are bolstered in a timely manner.

“The government stands to collect taxes faster, improving liquidity for public services,” he explained. “When businesses thrive, they generate higher turnover and ultimately pay more taxes, creating a ripple effect of growth and development.”

By alleviating financial pressures on businesses, the bill is projected to boost economic activity, leading to job creation and enhanced revenue for the government.

Additionally, the increased liquidity in the private sector is expected to stimulate further investments and foster innovation.

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