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February 18, 2019

Tax avoidance is lawful, not evasion - Kalonzo

Wiper leader Kalonzo Musyoka has said it is within the law to exploit loopholes in the system and pay less taxes. /FILE
Wiper leader Kalonzo Musyoka has said it is within the law to exploit loopholes in the system and pay less taxes. /FILE

Wiper leader Kalonzo Musyoka has urged Kenyans to exploit loopholes and pay lesser taxes.

The former Vice President said tax avoidance is perfectly lawful, but evasion is not.

"I'm a lawyer by profession and I know tax avoidance is within the law while tax evasion is not allowed," Kalonzo said.

He was addressing entrepreneurs during the launch of Andersen Tax Company.

Andersen Tax is one of the top US firms that advise on tax compliance.

Kalonzo said business people require expert advice on tax.

Tax avoidance is the arrangement of one's financial affairs to minimise tax liability within the law while tax evasion is the illegal non-payment or underpayment of tax.

"Kenya is economically sick, we hope this doesn't continue this way. When you collect taxes, Kenyans don't want to hear it has been stolen because then you complicate the sickness," Kalonzo said.

On September 20, Parliament adopted President Uhuru Kenyatta’s controversial memo that gives the executive powers to raise up to Sh130 billion through taxes including the eight per cent levy on fuel products.

The new taxes will ensure the government recoups addition income from money transfers (Sh11.4 billion), betting companies (Sh30 billion), the housing fund (Sh10 billion), kerosene (Sh9.8 billion) and sugar confectioneries (Sh475 million).

Read: MPs fail to overturn Uhuru's 8 per cent fuel tax

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