Home Business ICPAK URGES AN END TO PERSONAL INCOME DOUBLE TAXATION.

ICPAK URGES AN END TO PERSONAL INCOME DOUBLE TAXATION.

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Accountants have urged Parliament to change the law so that taxes and levies are deducted before Pay as You Earn (Paye) is applied to an employee’s salary. A maximum tax band should be established, according to the Institute of Certified Public Accountants of Kenya (ICPAK) and consulting firm Deloitte, in order to avoid overtaxing individuals’ income.

The highest rate of PAYE shouldn’t be greater than the company tax, the accounting firms advised the Finance and National Planning Committee. Companies are permitted to deduct expenses, and only earnings are subject to a 30% tax. However, individuals who receive salaries pay more in PAYE than in corporate tax, according to Fred Omondi, partner and head of legal at Deloitte.

 

While Paye is set at 32 percent and 35 percent for individuals making more than Sh800,000, I am aware that the Treasury plans to reduce company tax to between 25 and 28 percent. The highest pay rate shouldn’t be higher than the corporate pay rate.

In order to provide input on the proposed National Tax Policy, ICPAK, consulting firms Deloitte, Westminster Consulting, and the Institute of Economic Affairs (IEA) came before the National Assembly’s Finance Committee, which was presided over by Molo MP Kuria Kimani.

Kenya is attempting to pass a national tax code that will serve as a framework for taxation and provide tax predictability. The National Tax Policy, which aims to broaden the tax base, improve justice and equity in the tax system, and adopt best practices from throughout the world, is being discussed by a House committee.

The upcoming Finance Bill will be based on an agreed-upon tax strategy, Mr. Kimani stated, “so we are hoping that these few days of rigorous engagement with the stakeholders [we] will come up with a document that will guide our tax policy.” The accountants criticized the suggested tax strategy, saying it unfairly penalizes low-income people while benefiting a select few sectors.