Treasury CS Ukur Yatani has shed light on the reason Japanese workers and contractors handling mega projects worth Ksh 328 billion are exempted from paying taxes.
In a legal notice, CS Yatani directed that income from businesses and workers in the listed projects would not be taxed.
“Cabinet Secretary for National Treasury and Planning directs that the income which accrued in or was derived from Kenya by Japanese companies, Japanese consultants and Japanese employees involved in the projects shall be exempt from income tax,” the notice recently issued read in part.
He explained that the deal was made as part of the financing agreements Kenya signed with the contractors.
Section 13 (2) of the Income Tax Act reads: " The Minister may, by notice in the Gazette, provide that any income or class of income which accrued in or was derived from Kenya shall be exempt from tax to the extent specified in such notice. "
Some of the projects that were subject to the tax exemptions include Olkaria V Geothermal Power Development Project which cost Ksh 66.9 billion, Mombasa Special Economic Zone Development Project phase one (Ksh 38.2 billion), the Mombasa Port Area Road Development Project (Ksh 29 billion), power transmission line from Lessos to Kisumu (Ksh 18.2 billion) and Mwea Irrigation Development Project (Ksh 13.2 billion).
Japan is one of Kenya’s leading financial partners and was number one until China scooped the spot.
The news comes in the backdrop of agitation for fair tax policies from Kenyans who have been decrying increased taxation.
Tax levied on fuel triggered the tax debate after revelations that the government would pocket Ksh57 per litre in the new prices.
Government spokesperson Cyrus Oguna was at pains to explain the rationale, with his speech rubbing Kenyans the wrong way.
“The government is not doing any business but has the mandate to offer services. If we are not ready to help the government, who else will? You should not be crying,” Oguna had said.
His comments were, however, not welcomed by a section of Kenyans who wondered how he could compare Kenya with Europe bearing in mind the huge gaps in the two counties’ economy.
