The National Treasury plans to introduce wealth tax on rich Kenyans as it seeks to raise plug holes in its Ksh 3 trillion 2021/22 budget.
The Kenya Revenue Authority (KRA) also wants to raise Ksh 1.57 trillion for the financial year 2020/21, with the money channelled to the next financial year.
Treasury Principal Secretary Julius Muia, disclosed the plan to raise tax on wealthy individuals, saying that the money will aid in the recovery of the economy, which was disrupted by the Covid-19 pandemic.
“We are looking at fiscal changes that will go into the Finance Bill and we are in discussions over the wealth tax among many other fiscal reforms to boost revenue.
“It is too early to comment on how it will shape up as we are still discussing with stakeholders. We have a lot of issues that need to be cleared and procedures we have to follow before we implement it,”Muia told Business Daily.
He added that they were contemplating introducing the wealth tax for the high net worth individuals (HNWI) who will remit a small share of their net worth (assets minus liabilities) or a higher tax rate for those who earn huge amounts of money.
In August 2020, KRA raised concerns over how shrewd wealthy individuals and firms were conducting businesses without paying due taxes. It launched a crackdown on the said suspects after President Uhuru Kenyatta directed the agency to heighten its measures.
A majority of the Ksh 3 trillion budget for the year 2021/22 will be consumed by development projects, with Uhuru said to be keen on completing his Big 4 Agenda plan before the end of his term.
The President has been very firm on taxes.
“I will not lower taxes. You will have to pay because there is no other way we can build facilities, roads, and schools. We must pay taxes.
“The only thing we can do is easing the remission of taxes to avoid stalling business,”Uhuru said recently.
KRA also introduced new taxes in January 2021, among them the Digital Service Tax (DST) and Minimum Tax. DST is payable on income derived or accrued in Kenya from services offered through a digital marketplace.
Minimum Tax is a tax for the business people. It is charged on the income whether one makes a profit or not.