NAIROBI, June 3 (Xinhua) -- Kenya should consider reducing tax to help stimulate businesses, an expert said on Monday.
Michael Mburugu, head of tax at regional taxation firm PKF, told journalists in Nairobi that many large medium-sized companies are struggling to keep afloat due to sustained adverse economic climate in the last three years.
"In order to stimulate growth and put these companies back on track, the government should consider reducing the income tax rate from 30 (percent) to 20 percent for businesses for a period of three years to enable companies re-invest in their businesses and help to create employment," Mburugu said.
He noted that following the recently announced currency demonetization, a local tax amnesty would be a golden opportunity for the government to collect tax and also widen the tax net since many people would be attracted to take this up.
"The on-going foreign income tax amnesty that is expiring on June 30, 2019, has been very successful, an indication that a local amnesty would also be very successful," Mburugu said. "We recommend such an amnesty be at a preferential rate of principal tax, providing a win-win situation for both the government and the tax payer."
Kenya should also modernize its tax laws because the current income tax law was put in place in 1974, he said.
Mburugu said that the world has truly become a village and significant business deals are happening on a continuous basis between or among people who are in various parts of the world for which value is created and monumental sums of money is made.
"The taxation of such trade is complicated and requires modern tax laws and tools such as the common reporting standards... across various territorial jurisdictions," he added.
