Nairobi-based lobby urges Treasury to rescind decision on implementation of turnover tax

NAIROBI, Kenya, Jan 31 – A Nairobi based lobby group representing small traders has appealed to the Ministry of Treasury to halt the implementation of the three per cent turnover tax targeting Small and Medium-sized Enterprises (SMEs).

Tuitakayo Movement convener Francis Kuria said the tax will entrench inequality and impoverish the lowest members of society.

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Kuria added that the introduction and the collection of the tax would open doors for fraudsters and corrupt government officials to enrich themselves through the fraudulent collection of fees from small-scale traders.

“The truth of the matter is, this is an ambush to Kenyans, the constitution acquires public participation before new taxes are imposed the CS has not and did not include us, now the mama mboga has found herself in a position she does not understand,” Kuria said.

The tax was introduced by Treasury in the Finance Bill of 2019, as the government moves to widen the tax bracket and ensure compliance.

The levy targets small businesses that make sales of less than Sh5 million annually and is expected to be filed on a monthly basis.

The lobby’s co-convener Francis Kuria, termed the new turnover tax is unfortunate considering the high levels of unemployment.

“Political leaders are asking young people to venture into business and employ themselves, how can they survive while they are required to immediately start paying?”

He stated the Kenya Revenue Authority (KRA) has been unable to meet its revenue targets in the immediate past and has sluggish economy and revenue leakage as big businesses evade payment of tax.

“The government should find ways of bridging their revenue targets and if they do not stop the implementation of the tax. We are going to petition the National Treasury Cabinet Secretary Ukur Yatani. If they fail to do so, we are going to go High Court to seek an injunction,” he stated.

KRA early this year stated the re-introduction of both the Turnover (TOT) and Presumptive tax is for the benefit of all Kenyans.

Through a statement in the local dailies, the authority pointed out this will fairly spread the responsibility of developing the country to all citizens and residents of Kenya.

TOT does not apply to employment income, rental income, limited liability companies, and management and professional services.

A taxpayer can choose not to be subject to the TOT by applying to the commissioner in writing in which case the taxpayer is expected to prepare accounts and file returns annually under the normal income tax regime.