New proposed tax Bill seeks to address matters of unpaid taxes

The latest decision by President William Ruto's administration to completely do away with the tax relief framework is likely to bring back proposals that have been controversial in the past rejected finance bills.

The proposed Tax Procedures (Amendment) Bill, 2024 now seeks to give powers that were previously revoked by the Finance Act 2023, which was later nullified by the courts.

In the draft bill, there is a proposal to reintroduce key changes to how tax relief is handled.

Among the proposals in the new legislative move is the new Section 37F, which would amend the Tax Procedures Act.

This section brings a revised approach to tax relief, seeking to address issues related to unpaid taxes by Kenyans.

According to the draft bill, tax relief could be granted if the Commissioner determines that recovering unpaid taxes is either impossible, overly burdensome, or inequitable.

Treasury CS powers

This move will issue powers to the Cabinet Secretary for National Treasury to approve relief for part or all of the taxes owed or direct the Kenya Revenue Authority (KRA) to take appropriate actions.

The fresh proposal outlines that the National Treasury Cabinet Secretary has to publish a notice in the Gazette at least three times a year, publicising the names of taxpayers who have gotten relief, the reasons for this relief, and the amount of taxes abandoned.

This move is a shift from the previous requirement of twice-yearly notices.

The new proposals also demand that these notices be laid before the National Assembly, which will have the power to either approve or annul them within 21 days of the notice being laid.

Critics of the bill argue that these changes could open the door to potential misuse of tax relief provisions. The debate is particularly heated given past controversies involving tax relief decisions.

The proposal to have the changes effected comes in the wake of the March 2023 scandal, where the revenue collector was scrutinised over Sh20,356,398,799 worth of tax revenue abandoned between January 2018 and February 2023.