Members of Parliament on Tuesday, June 20, rejected three changes to the Finance Bill 2023 during its Third Reading as the opposition and the government differed on contentious clauses.
Despite the opposition's ardent defense and substantial justification of its proposals, the majority side unequivocally dismissed them, leaving the opposition short of the required numbers.
During the Third Reading, the House resorted to manual voting on particular clauses after the electronic system failed.
Rejected Clauses
Seme MP James Nyikal proposed an amendment to the definition of digital content monetization, whereby content creators would be subjected to a 3 percent withholding tax.
His amendment was supported by Kitui Central MP Makali Mulu, who termed the proposal as extremely unfair.
The amendment was rejected as 189 MPs voted against it, while 87 voted in favour.
Rental Income Tax
Under this proposal, property agents would be tasked with deducting and remitting rental income tax within 24 hours after receiving payments from tenants.
The clause provided that the tax would be collected by agents appointed by the Kenya Revenue Authority (KRA) commissioner in charge of domestic taxes.
Funyula MP Wilberforce Ojiambo Oundo proposed an amendment whereby property agents would remit the tax within three days instead of 24 hours.
The proposed legislation was, however, rejected.
Digital Monetisation
MP Nyikal proposed an amendment to clause 24 of the bill, which pertained to the withdrawal of income tax from digital content creation. His proposition garnered support from Wilberforce Ojiambo Oundo (Funyula) and Robert Mbui (Kathiani). The proposed amendment sought to reduce the tax to five percent instead of 15 percent.
Nyikal expressed concern that the tax proposal could have detrimental effects on young content creators, impeding their ability to sustain themselves financially. He emphasized that imposing strict regulations on creatives in the midst of a high unemployment rate would also hinder revenue generation.
Githunguri MP Gathoni Wamuchomba, concurred, arguing that the legislation was retrogressive. Wamuchomba was among the Ruto-allied MPs who opposed the Finance Bill, which has strained her relationship with the President and Kenya Kwanza politicians.
"I honestly feel that the people who are heavily involved in digital monetisation are the young people and most of them play within the age of below 35 years. Dealing with this category of Kenyans as any other body of professionals and imposing on them the 15 per cent down to 5 per cent, I still feel we're not being very fair to this category of digital monetisers," she stated.
The amendment was, however, rejected.
Approved Clauses
Betting
National Assembly Finance and Planning Committee Chairperson Kuria Kimani proposed an amendment to Clause 2 that targeted excise duty on betting.
The bill initially proposed the inclusion of wagered amounts in the computation of withholding tax - which would increase revenue generated from the industry.
The MP proposed that the amount wagered be set aside in the withholding tax, which the House approved.
Double Taxation
The Finance chair also proposed an amendment to Clause 5 of the Income Tax Act which aimed to permit the inclusion of club entrance and subscription fees as deductible expenses against the employer's income.
The original proposal had suggested that both the employer and employee would be subject to the tax burden. However, Kimani contended that such double taxation would not apply to the same payment, and this amendment was subsequently approved by the house.
Digital Asset Tax
The Finance Bill proposed digital asset taxes to be remitted to the revenue authority within 24 hours.
Kimani, lobbied for the legislation to stay, a position that stood in stark contrast to what several lawmakers wanted which was the collection periods extended to five working days.
Housing Fund
Kuria Kimani proposed an amendment to Clause 11, allowing the government to deduct a 1.5 per cent Housing tax from employees and employers.
"This clause we're adding is to allow that contribution by an employer to the housing levy be a tax-deductible expense when calculating the corporation tax of the employer," Kimani proposed the amendment, which was also approved.
Earlier, MPs removed the Ksh2,500 cap on the Housing Fund.
