Individuals and business owners are set to bear the brunt of the Robin Hood Tax should the proposed Finance 2018 bill be passed in its current state.
The 0.05 per cent tax on cash transfers above 500,000 will be applicable to money transferred from one account to another either within the same bank or between different banks. It will also be applicable to money transferred between individuals through cash transfer agencies or other financial service providers.
The committee amended the law to exclude tax remissions and refunds from the Kenya Revenue Authority, transfers from KRA’s collection accounts to Central Bank as well as transfers by or to the national government, county governments and CBK.
In its submission to the parliamentary committee on finance and national planning, Kenya Airways said the airline would have to pay an additional monthly cost of Sh1.1 million through transfer payments for taxes, landing and parking fees to the government.
To avoid chasing away investors, the proposed amendments also excluded transfers relating to the purchase and sale of shares and government securities at the NSE by banks and financial service providers on behalf of shareholders.
Transfers between accounts belonging to the same person will also be exempt from the Robin Hood Tax if the bill is assented into law.
Treasury CS Henry Rotich introduced the excise duty on cash transfers on June 14 in his budget speech which took effect on July 1.
High Court Judge Wilfrida Okwany however suspended implementation of the Robin Hood tax after The Kenya Bankers Association moved to court seeking suspension of the tax arguing that the “bank transfer" was vague and had not been defined properly by the Treasury.
Proposals under the Finance Bill 2018 will have to be voted on in parliament and given presidential assent before taking effect.