National Assembly rejects 5 per cent tax on infrastructure bonds interest
The Treasury had projected that taxing infrastructure bond interest would generate Sh13 billion annually, a crucial part of its efforts to raise Sh174 billion in additional revenue.
Members of Parliament have rejected a proposal by the Treasury to impose a five per cent withholding tax on interest earned from infrastructure bonds, marking a significant blow to the government's revenue-raising plans.
The tax proposal was part of the Tax Laws (Amendment) Bill, 2024, which sought to remove the tax exemption that has applied to infrastructure bonds since their introduction in 2009. If approved, this would have been the first time such bonds were subject to taxation.
More To Read
- Treasury revives plan to grant KRA real-time access to personal data in push for more tax
- Wealthy Africans often don’t pay tax: the answer lies in smarter collection - expert
- Relief for Kenyans as KRA announces new tax amnesty programme
- KRA announces changes to PAYE computation under new tax law
- Kenya Revenue Authority surpasses Sh1 trillion in revenue collection in five months
- National Assembly’s committee proposes two per cent railway levy, rejects lower rate
Chair of the Departmental Committee on Finance and National Planning, Kuria Kimani on Wednesday defended the decision to reject the tax measure, noting the importance of encouraging investments in Kenya, particularly in green bonds.
"I move that Clause 14 be amended as per the order paper. (I propose) to retain the provision on bonds which are exempt from income tax, which will encourage investment in Kenya, especially in green bonds which promote protection of the environment," said Kimani.
"This is where we're deleting the proposed withholding tax on infrastructure bonds," he added.
The Treasury had projected that taxing infrastructure bond interest would generate Sh13 billion annually, a crucial part of its efforts to raise Sh174 billion in additional revenue.
Deter investor interest
However, stakeholders warned that the new tax measure could deter investor interest in infrastructure bonds, raise the cost of infrastructure projects, and ultimately hinder the government's development goals.
The rejection of the proposal now compels the Treasury to explore alternative funding sources.
The Tax Laws (Amendment) Bill, 2024, was among several bills introduced to Parliament as part of a broader fiscal strategy.
Other related bills include the Tax Procedures (Amendment) Bill, 2024, and the Public Finance (Amendment) Bill, 2024.
Top Stories Today
- Bodyguard, driver were in contact with MP Charles Were’s killers- Police
- Government leases four state-owned sugar mills to private firms for 30 years
- State boosts roads budget to Sh171.9bn in infrastructure push
- Politician Philip Aroko detained for seven days in probe into Were's murder
- High Court bars police from investigating extra-judicial killings, abductions
- Mwilu had no power to appoint bench in Gachagua impeachment case, court rules
- Parastatals merger: 3,100 jobs at risk as Treasury plans retirement offers
- Education Ministry nullifies UoN leadership shake-up over legal breaches
- Were murder case: High Court orders Aroko to be produced on Monday
- Ruto moves to end ‘hakuna dawa’ with Sh10bn boost to KEMSA
- MCSK in turmoil as rivals clash over CEO Mutua’s position
- Over 150 illegal fuel dens demolished in Nairobi’s Industrial Area
- Global food prices climb for third straight month
- Audit flags Sh44.8 billion mystery on eCitizen platform
- AG seeks to block Omtatah’s Sh4.6 trillion debt petition
- UN extends South Sudan peace mission for a year
- State unveils rescue plan for debt-ridden public universities
- CS Wahome slammed for skipping Senate committee seven times
- 12 killed in Nakuru black spot horror crash on Njoro-Elburgon road
- Kenya’s child welfare crisis: Trafficking surges as support declines
