•The government, in a bill by Garissa Township MP Aden Duale, is targeting to tax the rich more.
•The reliefs follow the country’s preparedness to contain coronavirus infections, whose cases stood at 138 as of Sunday
A number of medicines will cost less should the National Assembly pass the proposed amendments to various tax laws in its special sittings on Wednesday.
This will be a relief to the sick and pharmacists, especially in the face of the ravaging effects of coronavirus to the country’s economy.
Leader of Majority Aden Duale had indicated that the Tax Laws (Amendment) Bill, 2020, would be passed through all stages for immediate reliefs to Kenyans.
In the legislation, vaccines for human medicine as well as for veterinary medicine will be exempt from Value Added Tax (VAT).
This will be the case of antibiotics – containing penicillin or derivatives, and medicines for treating respiratory diseases.
The reliefs follow the country’s preparedness to contain coronavirus infections, whose cases stood at 126 as of Saturday.
Quinine wholesalers will get a reprieve in the exemption of such medicine when not put in measured doses or in forms or packings for retail.
Infusion solutions for ingestion other than by mouth not put up in measured doses or in forms or packings for retail sale will also be tax-free.
This will be the case of preventive medicines, ointments, and those for managing colds will also be exempt from tax for wholesalers.
Other medication containing vitamins or other products of heading put up in measured doses or in forms or packings for retail sale will be exempt from VAT.
The government seeks to expand the tax bracket to mop up more cents from revenue streams that have been having tax holidays.
But even so, the proposed tax changes give investors relief in deduction of investment allowance from taxable income.
Investment allowance is a tax incentive offered to businesses to encourage capital investment in which they can deduct percentage of the capital cost from taxable income.
If the bill is passed, those who own hotel buildings will deduct 50 per cent rate of investment allowance in the first year of use.
This will also apply to buildings used for manufacturing purposes; hospital buildings; as well as petroleum and gas facilities.
Educational buildings such as student hostels will be allowed a 10 per cent deduction and so will be commercial buildings.
Those who own machinery for manufacture will deduct from their income, an investment allowance of 50 per cent in the first year of use.
Hospital equipment, ships, and aircraft will also be allowed a relief of 50 per cent in the tax proposals to boost investment in health facilities.
Car owners and investors in earthmovers will enjoy a 25 per cent investment allowance on reducing balance – factoring depreciation.
Computer assets will also be excused a 25 per cent allowance with furniture and telecommunications giving 10 per cent reliefs.
Farmworks will guarantee taxpayers 50 per cent investment allowances in the first year of use and 25 per cent per year on reducing balance.
The laws will apply to licensed hotels, educational institutions, and hospitals.
Those who invest in buildings used as offices, shop, showroom and godown for storage of raw materials will benefit.
Machinery used in electricity generation and distribution; clean up and disposal of waste; water supply; maintenance, and scientific research will qualify for the relief.
The Tax Laws further propose an expansion of the income tax band for the lowest – Sh400,000 to pay 10 per cent tax.
However, the government, in the bill by Garissa Township MP Aden Duale, is targeting to tax the rich more.
In this regard, importers of helicopters not exceeding 2,000 kilos and those exceeding the said weights will pay tax.
There will no more tax holidays for chopper spare parts, air combat simulators and parts; aircraft launching gear and parts; and other ground flying trainers.
Car dealers will also pay Sh10,000 processing fee for motor vehicles and movable equipment prior to their clearance at the entry ports.
Various state agencies that have been paying no tax on their income will be charged the same once the bill is passed.
On the flip side, prices of fertilizers, LPG cooking gas, bread, animal feeds, and solar equipment will go up in the proposed changes.