Controversial Gatundu South MP Moses Kuria has dropped a proposed amendment that sought to cap foreign funding for NGOs at 15 per cent.
But the rest of the proposed changes to the Public Benefit Organisations (PBO) Act will remain if the Budget and Appropriations Committee agrees to publish the amendment Bill.
The Bill seeks to have public benefits organisations, also known as NGOs, to submit their annual financial statements to the Auditor-General and publish them in two newspapers with national circulation.
Those that commit economic crimes would be subjected to investigations by the Ethics and Anti-Corruption Commission so that those guilty are dealt with in the same way as civil servants and State Officers.
“I have agreed to remove the cap of 15 per cent to make life easier for them, but I am happy the rest of the Bill was received positively by my colleagues,” said Mr Kuria, who spoke after last week’s meeting of the Budget Committee, where the proposal was scrutinised.
The Bill, if passed into law, will put pressure on NGOs, 957 of which were facing deregistration last week after the NGOs Coordination Board said they had failed to account for money.
The Parliamentary Budget Office said passing the Bill as it was would provide proper mechanisms for transparency and accountability in financing NGOs.
However, it warned the minimum threshold for foreign funding as had been proposed would force some to close shop.
“There is no doubt the organisations employ a number of Kenyans of diverse professions and skills. However, restriction on external funding to 15 per cent may force some to close down and this will also lead to staff lay offs,” said the Budget Office, a team of economists and budget experts that advises MPs on related issues.
It said repealing part of the PBO Act giving the organisations certain tax exemptions would bring the NGOs in conformity with the government tax and fiscal policy and yield more revenue for the government.
Currently, the PBO Act exempts NGOs from income tax on membership subscriptions and any donations or grants or if the income is used to support public benefit purposes.
They are also spared from tax on interest and dividends on investments, stamp duty as well as court fees.
According to the NGOs Coordination Board strategic plan for 2014 to 2017, there are 8,569 registered NGOs and it is estimated that this number increases by more than 750 each year.