KRA wants anti-capital gains tax case dismissed

The taxman wants a suit challenging re-introduction of Capital Gains Tax struck out.

In documents filed yesterday, the Kenya Revenue Authority said Kenya Association of Stockbrokers and Investment Banks (Kasib) is not the target of the tax, but the investor who buys and sells securities.

Mr James Ojee, acting deputy commissioner with KRA said Kasib had not demonstrated any challenge to the law. “It would be detrimental if the law is to be suspended merely because of a few implementation challenges which can be resolved if KRA is given time to,” he said.

The deputy commissioner said any concerns raised by Kasib about loss of tourism revenue, employment or mushrooming of illegal casinos are futuristic and not supported by any evidence.

“The petitioner instead ought to embrace a wholesome interpretation of the constitution. It provides that the burden of taxation shall be shared equally,” he said.

Mr Ojee said the efforts taken to draw in players from the financial, securities and insurance segments is meant to address some of the implementation programmes for ease of accounting for tax.

PETITIONERS

He said reintroduction of the tax is meant to include income from all sectors that have enjoyed freedom before so that they can contribute to the national revenue. “The petitioners should be the last to object to the collecting of taxes centrally,” he said.

Kasib went to court demanding that the tax be overturned as it was not conforming to the present day situation. It said KRA had re-introduced vagueness and ambiguity into the law governing the charging and collection of the capital gains tax, which has consequently exposed Kenyans to prosecution for non-compliance.

“The Finance Bill 2014,” they said, “applies retrospectively, breaching the Constitution by depriving Kenyans of capital gains that were accrued at a time when they had no obligation to pay tax on the CGT,” Kasib said.

Hearing resumes on Monday.

Meanwhile, tax experts have urged the government to suspend contentious clauses in the capital gains tax and subject them to public participation for an amicable resolution. Further, they say the manner in which it was introduced was not transparent as it did not incorporate public participation.

“The tax base in Kenya has been very narrow. So, any efforts to expand it and bring more people into the bracket is very laudable. But what we are saying is that even if this is done, it should be in a transparent manner where proper consultations have been done,” Mr Maurice Wangutusi, tax director at Deloitte East Africa said in Nairobi yesterday.

“My view for now is that it must be suspended to allow the stakeholders to participate. The tax in itself is not a bad thing but if introduced in a proper way, then it is going to benefit the government in the way it is intended,” said Mr Andrew Oduor, a partner at HHM Oraro advocates.