Monday, June 27, 2022
Monday, June 27, 2022
Home Business EY Positions Kenya Within An Improving Global Economy

EY Positions Kenya Within An Improving Global Economy

by Caroline Vutagwa
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In the words of the Cabinet Secretary for the National Treasury (CS), ‘the government has listened to the concerns raised by Kenyans and it intends to address them ‘comprehensively’.

According to the Cabinet Secretary, Kenyans’ main concerns are insecurity, high cost of living,joblessness, protecting the poor and vulnerable and wastage in public expenditure across the entire Government.

GitahiGachahi, CEO of EY Eastern Africa says, “Most of the proposed government interventions in 2014/2015 are similar to those in the 2013/2014 budget, some of which were not fully implemented. It remains therefore, that Kenyan’s concerns will be addressed once these budget proposals are implemented to the letter.”

The 2014/2015 budget proposes new laws and institutions, especially in the financial sector, and old laws modernized, especially in extractive industry sectors (mining, oil and gas).

The government expects to raise Ksh. 1.1 Trillion from revenue collection, a 15% Increase from FY 2013/2014. Although the target is based on projected economic growth, the KRA is expected to institute measures to expand the revenue base and eliminate tax leakages.

Gachahi says, “We are pleased to hear that the CS is proposing tax law reforms to simplify them and make them consistent with international best practices. The proposedIncome Tax Act, Excise Duty Act and Tax Procedures Bill – aimedat harmonizing procedures across all tax legislations – are all worthy initiatives. But the devil will be in the detail of how these are implemented in a timely manner, without impacting on the ease of doing business in Kenya.”

Various tax measures have been introduced in the latest Finance Bill which are aimed at encouraging local private sector development. This include an increase in import duty on iron and steel to cushion local iron and steel industries, and cancellation of execution of bonds by importers of refined industrial sugar and wheat, who are under the duty remission regime.

To curb cost of living, the Bill has exempted from import duty all imported inputs used in the processing and preservation of seeds for planting.

The government restated its intention to safeguard and promotethe oil andgas industry. In addition to proposing institutional and legal reforms for the extractive industry sector, the Finance Bill has replaced the current withholding tax applicable on assignment of rightswith income tax, based on net gain in line with international practice.

The 2014/2015 fiscal budget is formulated around six strategies that are aimed at responding to the concerns of Kenyans, as well as maintaining macro- economic stability.

The six strategies include; addressing insecurity through increased budgetary allocation to security organs; developing an elaborate and modern transport and logistic network through construction of roads, airports and railway lines; reducing cost of living and ensuring food security by transforming agriculture through promotion of irrigation; investing more resources to enhance the quality and accessibility of healthcare services and education; encouraging entrepreneurship among the youth and women through provision of start-up capital  to curb unemployment and to strengthen devolution so as to facilitate efficient delivery of services.

Gachahi:  “There are some welcome initiatives which the Government has restated its commitment to. These include reducing wastage and ensuring efficiency and transparency in government spending through adoption of ICT in government. We were pleased to see the Treasury Single Account was still in the picture too. We are committed to playing our part with clients and the government to ensure that these projects are fully implemented.”

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