M-Wakili

No 38 Of 2016 - as Plain Text by MWakili

SPECIAL ISSUE Kenya Gazette Supplement No.

159 (Acts No.

38) REPUBLIC OF KENYA KENYA GAZETTE SUPPLEMENT ACTS, 2016 NAIROBI, 20th September, 2016 CONTENT Act PAGE The Finance Act, 2016 949 NATIONAL COUNCIL FOR LAW REPORTING RECEIVED 2T SEEP 2915 , P.O.

Bo 10443 00100 NAIROBI, KENYA TEL: 2'1./231 FAX: 2112694 PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI 949 THE FINANCE ACT, 2016 No.

38 of 2016 Date of Assent: 13th September, 2016 Date of Commencement: See Section 1 AN ACT of Parliament to amend the law relating to various taxes and duties and for matters incidental thereto ENACTED by the Parliament of Kenya, as follows- PART I-PRELIMINARY 1.

This Act may be cited as the Finance Act, 2016, Short title and and shall come into operation, or be deemed to have come commencement.

into operation, as follows - (a)Sections 2, 3, 5, 7, 9, 10, 11, 12, 13, 14, 15, 18, 19, 22, 23, 24, 25, 28, 29, 30, 31, 32, 34, 36, 54 and 67, on the 9th June, 2016; (b)Sections 39(a) and 41, on the 19th January, 2016; (c)Sections 16, 20, 21, 26, 29, 33 and 37, on the 1st July, 2016; (d)All other sections on the 1st January, 2017 PART II-INCOME TAX 2.

Section 2 of the Income Tax Act is amended in Amendment of section 2 of Cap.

subsection (1) by inserting the following definition in 470.

proper alphabetical sequence - "deemed interest" means an amount of interest equal to the average ninety-one day Treasury Bill rate, deemed to be payable by a resident person in respect of any outstanding loan provided or secured by the non- resident, where such loan is provided free of interest.

3.

Section 6A of the Income Tax Act is amended in Amendment of section 6A of Cap.

subsection (1) by deleting the words "does not exceed" and 470.

inserting the words "is in excess of one hundred and forty- four thousand shillings but does not exceed".

4.

Section 10 of the Income Tax Act is amended by Amendment of section 10 of Cap.

deleting paragraph (g).

470.

950 No.

38 Finance 2016 5.

Section 12 of the Income Tax Act is amended Amendment of section 12 of Cap (a) by inserting the word "or" immediately before the 470.

expression "37"; (b) by deleting the expression "or 17A" and all the words appearing thereafter.

6.

Section 15 of the Income Tax Act is amended in Amendment of section 15 of Cap.

(a) subsection (2) by inserting the following new 470.

paragraph immediately after paragraph (y) "(z) expenditure incurred in that year of income by a person sponsoring sports, with the prior approval of the Cabinet Secretary responsible for sports"; (b) subsection (3) (b) by deleting the words "one hundred and fifty" and substituting therefor the words "three hundred".

7.

Section 16 of the Income Tax Act is amended in Amendment of section 16 of Cap.

subsection (3) by deleting the definition of the expression 470.

"deemed interest".

8.

Section 34 of the Income Tax Act is amended - Amendment of section 34 of Cap.

(a) in subsection (1) by deleting paragraph (m); and 470.

(b) in subsection (2) by deleting the following paragraph (i) (i) winnings payable by bookmakers to punters (players).

9.

Section 35 of the Income Tax Act is amended- Amendment of section 35 of Cap.

(a) in subsection (1) by deleting paragraph (j); 470.

(b) in subsection (3) (i) by inserting the words "subject to subsection (3A)" at the beginning thereof; (ii) by deleting paragraph (i); (iii) by inserting the following new paragraph immediately after paragraph (i)- (j) rent, premium or similar consideration for the use or occupation of immovable property; 951 2016 Finance No.

38 (c) by inserting the following new subsection immediately after subsection (3)- (3A) Notwithstanding the provisions of subsection (3), only a person appointed for that purpose by the Commissioner, in writing, shall deduct tax under paragraph (j) of that subsection.

(d)by deleting subsection (6).

10.The Income Tax Act is amended in section 37 Amendment of section 37 of Cap.

(a)by deleting subsection (6); 470.

(b)by deleting subsection (7).

11.The Income Tax Act is amended by repealing Repeal of section section 51A.

51A of Cap.

470.

12.The Income Tax Act is amended by repealing Repeal of section 72 section 72.

of Cap.

470.

13.The Income Tax Act is amended by repealing Repeal of section section 75A.

75A of Cap.

470.

14.The Income Tax Act is amended by repealing Repeal of section 98 section 98.

of Cap.

470.

15.The Income Tax Act is amended by repealing Repeal of section section 105.

105 of Cap.

470.

16.The First Schedule to the Income Tax Act is Amendment of the First Schedule to amended in Part I by adding the following new paragraphs Cap.

470.

in proper numerical sequence- 53.

Income from employment paid in the form of bonuses, overtime and retirement benefits: Provided that this paragraph shall only apply to employees whose taxable employment income before bonus and overtime allowances does not exceed the lowest tax band provided under Head B of the Third Schedule.

54.

Interest income on bonds issued by the East African Development Bank.

17.

The Third Schedule to the Income Tax Act is Amendment of the Third Schedule to amended Cap 470.

(a) in item 1 of Head A ( Resident Personal Relief), by deleting the expression "thirteen thousand nine hundred and forty-four" and substituting therefor the expression "fifteen thousand three hundred and sixty"; 952 No.

38 Finance 2016 (b) by deleting item 1 and 1A of Head B (Rates of Tax) and substituting therefor the following new items- 1.

The individual rates of tax shall be Rate in each shilling On the first Shs.134,164 10% On the next Shs.126,403 15% On the next Shs.126,403 20% On the next Shs.126,403 25% On all income over Shs.513,373 30% Rate in each shilling On the first Shs.134,164 10% On the next Shs.126,403 15% On the next Shs.126,403 20% On the next Shs.126,403 25% On all income over Shs.513,373 30% (c) in paragraph (2), by inserting the following new subparagraph immediately after subparagraph (h) (i) in the case of a company that constructed at least four hundred residential units annually, fifteen per cent for that year of income, subject to approval by the Cabinet Secretary responsible for housing, provided that where a company is engaged in multiple activities which include the ones specified in subparagraph (i), the rate of fifteen per cent shall be applied proportionately to the extent of the turnover arising from the housing activity.

in paragraph 5, by deleting the expression "twelve (d)per cent" appearing in subparagraph (ja) and substituting therefor the expression "ten per cent"; 953 2016 Finance No.

38 (e) Head B of the Third Schedule to the Income Tax Act is amended- (i) in paragraph 3 by deleting subparagraph (m); (ii) in paragraph 5 by deleting subparagraph (j).

18.

Paragraph 6 of the Eighth Schedule to the Income Amendment of Tax Act is amended by deleting subparagraph (2)(h) and the Eighth Schedule to Cap substituting therefor a new subparagraph as follows 470.

(h) by the transfer of assets (i) between spouses; (ii) between former spouses as part of a divorce settlement or a bona fide separation agreement; (iii) to immediate family; (iv) to immediate family as part of a divorce or bona fide separation agreement; or (v) to a company where spouses or a spouse and immediate family hold 100% shareholding.

19.

The Income Tax Act is amended by repealing the Repeal of the Thirteenth Schedule.

Thirteenth Schedule to Cap.

PART III EXCISE DUTY 470.

20.

Section 2 of the Excise Duty Act, 2015 is Amendment of amended section 2 of Act No.

23 of 2015.

(a) in the definition of the word "export", by inserting the expression "a special economic zone" immediately after the words "foreign country"; (b) in the definition of the word "import", by inserting the expression "a special economic zone" immediately after the words "a foreign country"; (c) by inserting the following new definition in proper alphabetical sequence No.

16 of 2015 "special economic zone" shall have the meaning assigned to it under the Special Economic Zones Act, 2015; 954 No.

38 Finance 2016 21.

Section 4 of the Excise Duty Act, 2015 is Amendment of amended in subsection (2)(c) by inserting the words "or section 4 of No.23 special economic zone" immediately after the words of 2015.

"export processing zone".

22.

Section 10 of the Excise Duty Act, 2015 is Amendment of amended by deleting the expression "Part II" and section 10 of No substituting therefor the expression "Part I".

23 of 2015.

23.

Section 15 of the Excise Duty Act, 2015 is Amendment of amended in subsection (1)(b) by deleting the expression section 15 of No.

"27" and substituting therefor the expression "28".

23 of 2015.

24.

The First Schedule to the Excise Duty Act, 2015 Amendment of is amended in Part I the First Schedule to No.

23 of 2015.

(a) by inserting the following immediately below tariff No.

2710.19.21 and the description thereof Tariff Tariff Description Rate No.

2710.1 Illuminating kerosene KSh.7,205 9.22 per 1000 litres @ 20 degrees centigrade.

(b) by inserting the following immediately below the item entitled "Food supplements" Tariff Description Rate Cosmetics and Beauty products of tariff 10% heading No.

3303, 3304, 3305 and 3307 (c) by inserting the expression "(excluding water of tariff No.

2201.90.00)" immediately after the word "Waters" appearing in the item entitled "Waters and other non-alcoholic beverages not including fruit or vegetable juices"; (d) by deleting the words "less than three years old from the date of first registration, Shs 150,000 per unit, over three years old from the day of first registration Shs.

200,000 per unit" appearing in the second column against the tariff description relating to motor vehicles excluding locally assembled motor vehicles and substituting therefor the expression "20%"; 955 2016 Finance No.

38 (e) by inserting the words "and locally assembled motor cycles" immediately after the words "motor cycles ambulances" appearing in the item titled "Motor cycles of tariff 87.11 other than motor cycle ambulances"; (f) by inserting the words "excluding school buses for use by public schools" immediately after the word "vehicles" appearing in the item titled "motor vehicles of tariff heading 87.02, 87.03 and 87.04"; (g) by deleting the formula "AxB" in paragraph 2 (2) and substituting therefor with the formula "A(1+B)".

25.

The Second Schedule to the Excise Duty Act, Amendment of 2015 is amended in Part A by inserting the following new the Second Schedule to No.

paragraphs immediately after paragraph 8 23 of 2015.

"9.

Excisable goods imported or purchased locally for direct and exclusive use in the implementation of an Official Aid-Funded Project, to the extent provided for under the financing agreement.

10.

Excisable goods imported for direct use in the manufacture of sanitary towels.

11.

All goods including materials supplies, equipment, machinery and motor vehicles for the official use by the Kenya Defence Forces and the National Police Service.

PART IVVALUE ADDED TAX 26.

Section 2 of the Value Added Tax Act, 2013 is Amendment of amended section 2 of No.

35 of 2013.

(a) in the definition of the word "export", by inserting the words "a special economic zone enterprise" immediately after the words "a foreign country"; (b) in the definition of the word "importation" by inserting the words "a special economic zone enterprise" immediately after the words "a foreign country"; (c) by deleting the definition of the expression "non- resident person"; 956 Finance 2016 No.

38 (d) in the definition of the expression "registered person", by inserting the words "or a special economic zone" immediately after the words "export processing zone enterprise"; (e) by deleting the definition of the expression "tax representative"; (f) by inserting the following definitions in proper alphabetical sequence "hotel" includes premises commonly referred to as "service flats", "service apartments", "beach cottages", "holiday cottages", "game lodges", "safari camps", "bandas" or holiday villas" and other premises or establishments used for similar purposes, but does not include (i) premises on which the only supply is under a lease or licence of not less than one month, unless the agreement relating thereto provides that by prior arrangement the occupier may, without penalty, terminate the lease or licence on less than one month's notice; or (ii) premises operated by an educational or training institution approved by the Cabinet Secretary for the time being responsible for education for the use of the staff and students of that institution; or (iii) premises operated by a medical institution approved by the Cabinet Secretary for the time being responsible for health, for the use of the staff and students of that institution; No.

16 of 2015 "special economic zones" shall have the meaning assigned to it under the Special Economic Zones Act, 2015.

27.

Section 13 of the Value Added Tax Act, is Amendment of amended in subsection (7) section 13 of No.

35 of 2013.

(a) by adding the words "any service charge paid in lieu of tips" at the end thereof; (b) by adding the following proviso at the end thereof- 957 2016 Finance No.

38 Provided that this subsection shall only apply in respect of service charge where (a) the service charge is distributed directly to the employees of the hotel or restaurant in accordance with a written agreement between the employer and the employee; and (b) the service charge does not exceed ten per cent of the price of the service, excluding such service charge.

28.The Value Added Tax Act, 2013 is amended by Repeal of section repealing section 33.

33 of No.

35 of 2013.

29.Section 36 of the Value Added Tax Act, 2013 is Amendment of amended in subsection (10) by deleting the expression section 36 of No.

"subsection (1)" and substituting therefor the expression 35 of 2013.

"subsection (9)".

30.The First Schedule to the Value Added Tax Act, Amendment of 2013 is amended the First Schedule to No.

35 of 2013.

(a) in Part I (i) by inserting the tariff numbers 2302.10.00, 2302.30.00, 2303.30.00, 2304.00.00, 2306.10.00, 2306.20.00, 2306.30.00, 2306.41.00, 2306.49.00, 2306.50.00, 2306.60.00, 2306.90.00, 2835.25.00 and 2835.26.00 at the end of paragraph 43; (ii) by deleting the words "excluding motor vehicles" appearing in paragraph 51; (iii) by inserting the words "upon recommendation by the Kenya Film Commission" in paragraph 54 immediately after the word "agents"; (iv) by deleting the words "and recreational parks of one hundred acres or more approved by the Cabinet Secretary for the National Treasury upon recommendation by the Cabinet Secretary responsible for Industrialisation" appearing in paragraph 55 and substituting therefor the words "parks of one hundred acres or more including those outside special economic zones approved by the Cabinet Secretary for the National Treasury"; 958 No.

38 Finance 2016 (v) by deleting paragraph 57 and substituting therefor the following new paragraph 57.

All goods including material supplies, equipment, machinery and motor vehicles, for official use by the Kenya Defence Forces and the National Police Service.

(vi) by inserting the following paragraphs immediately after paragraph 57 compasses, 58.

Direction-finding instruments and appliances for aircraft.

59.

Wheat seeds of tariff number 1001.11.00 and 1001.91.00.

60.

Museum and natural history exhibits and specimens and scientific equipment for public museums.

61.Chemicals, reagents, films, film strips and visual aid equipment imported or purchased prior to clearance through the customs by the National Museums of Kenya.

62.

Taxable goods for direct and exclusive use for the construction of tourism facilities, recreational parks of fifty acres or more, convention and conference facilities upon recommendation by the Cabinet Secretary responsible for matters relating to recreational parks.

For the purposes of this paragraph, "recreational parks" means an area or a building where a person can voluntarily participate in a physical or mental activity for enjoyment, improvement of general health, well-being and the development of skills.

63.

Taxable good for the direct and exclusive use for construction of specialized hospitals with accommodation facilities upon the recommendation by the Cabinet Secretary responsible for health who shall issue guidelines for the criteria to be used to determine eligibility for the exemption.

959 2016 Finance No.

38 64.

Garments and leather footwear, manufactured in an Export Processing Zone at the point of importation.

65.Taxable goods locally purchased or imported by manufacturers or importers of clean cooking stoves for direct and exclusive use in the assembly, manufacture or repair of clean cook stoves approved by the Cabinet Secretary upon recommendation by the Cabinet Secretary for the time being responsible for matters relating to energy.

66.

Inputs or raw materials locally purchased or imported by manufacturers of clean cook stoves approved by the Cabinet Secretary upon recommendation by the Cabinet Secretary for the time being responsible for energy.

67.

Stoves, ranges, grates, cookers (including those with subsidiary boilers for central heating) barbeques, braziers, gas- rings, plate warmers and similar non-electric domestic appliances, and parts thereof, or iron or steel of tariff numbers 7321.11.00, 7321.81.00, 7321.12.00, 7321.19.00, 7321.82.00, 7321.83.00 and 7321.90.00.

68.

Super absorbent polymer (SAP) of tariff number 39.06.90.0.

69.

Carrier tissue white, 1 ply 14.5 GSM of tariff number 4703.21.00.

70.

IP super soft fluff pulp fr-fluff 310 treated pulp 488*125mm (cellose) of tariff number 4703.21.0.

71, Perforated PE film 15-22 gsm of tariff number 3921.190.0.

72.

Spunbound non-woven 15-25 gsm of tariff number 56.03.1190.8.

73.

Airlid paper with super absorbent polymer 180gsm/67 of tariff number 48.03.00.0.

960 No.

38 Finance 2016 74.

Airlid paper with super absorbent polymer 80gsm/67 of tariff number 48.03.00.0.

75.

Airlid paper without super absorbent polymer 180gsm/67 of tariff number 48.03.00.0.

76.

Airlid paper without super absorbent polymer 80gsm/67 of tariff number 48.03.00.0.

77.

Pressure sensitive adhesive of tariff number 3506.91.90.

78.

Plain polythene film/LPDE of tariff number 39.21.190.0.

79.

Plain polythene film/PE of tariff number 39.21.190.0.

80.

PE white 25-40gsrn/release paper of tariff number 48.44.51.10.0.

81.

ADL 25-40gsm of tariff number 56.03.1190.8.

82.

Elasticized side tape of tariff number 5402.4410.

83.12-16 gsm spunbound piyropononwoven coverstock/12g sm spunbound PP non-woven SMS hydrophobic leg cuffs of tariff number 56.03.1190.8.

84.

Polymetric elastic 2/3 strands of tariff number 3919.90.90.10.

85.

Plain polythene film/PE of tariff number 39.20.10.10.

86.

PE white 25-40gsm/release paper of tariff number 48.10.99.00 87.12-16 gsm spunbound piyropononwoven coverstock/15gsm spunbound PP non-woven SSMMS hydrophobic leg cuffs of tariff number 56.03.1190.

961 2016 Finance No.

38 (b) in Part II (i) by deleting the word "certified" appearing in paragraph 21 immediately after the word "agent" and substituting therefor the words "upon recommendation"; (ii) by deleting the words "and recreational parks of one hundred acres or more approved by the Cabinet Secretary for the National Treasury upon recommendation by the Cabinet Secretary responsible for Industrialization" appearing in paragraph 22 and substituting therefor the words "parks of one hundred acres or more including those outside special economic zones approved by the Cabinet Secretary for the National Treasury"; (iii) by deleting paragraph 24 and substituting therefor the following new paragraph 24.

Entry fees into the national parks and national reserves.

(iv) by inserting the following new paragraphs immediately after paragraph 24 25.

The services of tour operators, excluding in-house supplies.

26.

Taxable services for direct and exclusive use for the construction of tourism facilities, recreational parks of fifty acres or more, convention and conference facilities upon the recommendation by the Cabinet Secretary responsible for matters relating to recreational parks.

27.

Taxable services for direct and exclusive use for the construction of specialized hospitals with accommodation facilities upon recommendation by the Cabinet Secretary responsible for health, who shall issue guidelines for the criteria to determine the eligibility for the exemption.

962 No.

38 Finance 2016 (c) Section B of Part I of the First Schedule is amended by (i) renumbering the existing provision in section B of Part I as paragraph (1); (ii) inserting the following new paragraph immediately after paragraph (1) (2) Notwithstanding paragraph (1), the exemption shall be extended by a further two years from 1st September, 2016.

31.

The Second Schedule to the Value Added Tax Amendments of Act, 2013 is amended- the Second Schedule to No.

(a) in Part A, by inserting the following new 35 of 2013.

paragraph immediately after paragraph 11 12.

The supply of goods or taxable services to a special economic zone enterprise.

13.The supply of liquefied petroleum gas.

(b) in Part C- (i) by inserting tariff number 3003.20.00; in proper numerical sequence; (ii) by deleting tariff number 3303.20.00.

PART VTAX PROCEDURES ACT 32.

Section 3 of the Tax Procedures Act, 2015 is Amendment of amended in the definition of the expression "tax return" by section 3 of No.

deleting the expression "13(1)" and substituting therefor 29 of 2015.

the expression "9A".

33.

The Tax Procedures Act, 2015 is amended by Insertion of inserting the following new section immediately after section 15A in section 15 No.

29 of 2015.

Appointment of tax 15A (1) In a case where a non-resident representative by person with no fixed place of business in non-resident person Kenya is required to register under a tax law, the non- resident person shall appoint a tax representative in Kenya in writing.

(2) Where a person required to appoint a tax representative in accordance with sub section (1) fails to do so, the Commissioner 963 2016 Finance No.

38 may appoint a tax representative for that person, and the tax representative so appointed shall have the duties and obligations specified under section 15.

34.

Section 17 of the Tax Procedure Act, 2015 is Amendment of amended in subsection (3) by deleting the words "person section 17 of No.

that" and substituting therefor the words "person shall".

29 of 2015.

35.Section 19 of the Tax Procedures Act, 2015 is Amendment of amended by inserting the following new subsection section 19 of No.

immediately after subsection (2) 29 of 2015.

(3) An applicant shall, in addition to the requirements set out in subsections (1) and (2), be required to be recommended for registration by the Tax Agents Committee.

36.Section 22 of the Tax Procedures Act, 2015 is Amendment of amended in subsection (1) by deleting the word "meeting" section 22 of No.

appearing immediately after the words "the Commissioner 29 of 2015.

in" and substituting therefor the word "writing".

37.

The Tax Procedures Act, 2015, is amended by Insertion of inserting the following new section immediately after section 24A in section 24 No.

29 of 2015.

Duty to submit third 24A.

A person shall, upon being party returns.

required to do so by the Commissioner, furnish the Commissioner with returns showing such information, in such form and manner and within such time as the Commissioner may prescribe.

38.

Section 33 of the Tax Procedures Act, 2015 is Amendment of amended in subsection (3) by inserting the words "within section 33 of No.

30 days of receiving the application for extension of time" 29 of 2015.

immediately after the word "time".

39.The Tax Procedures Act, 2015 is amended- Insertion of section 37A in (a) by inserting the following new section No.

29 of 2015.

immediately after section 37 Commissioner to 37A.

(1) Subject to subsection (2) and refrain from assessing notwithstanding any other provisions of this in some cases.

Act, the Commissioner shall, with effect 964 No.

38 Finance 2016 from the 1st July, 2015, refrain from assessing or recovering (a)taxes, penalties or interest thereon in respect of any period before and during the 2013 year of income; or (b)penalties or interest thereon in respect of the 2014 and 2015 years of income, where (i) the income is in respect of gains or profits for the use or occupation of property earned by an individual; and (ii) the returns or amended returns for the 2014 and 2015 years of income are submitted and the tax paid on or before the 30th June, 2016.

(2) Where a person has no documentation to support expenditure, such person shall be allowed a deduction of forty per cent of the expenditure.

(3) This section shall not apply in respect of any tax where the person who should have paid the tax (a) has been assessed in respect of the tax; or (b) is under audit or investigation in respect of undisclosed income for the years of income to which this section applies or any matter relating to such undisclosed income.

(b) by inserting the following new section immediately after section 37A 965 2016 Finance No.

38 Commissioner to 37B.

Notwithstanding any other refrain from assessing provision of this Act, the Commissioner tax for income earned outside Kenya.

shall refrain from assessing or recovering taxes, penalties or interest in respect of any year of income ending on or before the 31st December, 2016, and from following up on the sources of income under the amnesty where (a) that income has been declared for the year 2016 by a person earning taxable income outside Kenya; and (b) the returns and accounts for the year 2016 are submitted on or December, 2017: before the 31st Provided that this section shall not apply in respect of any tax where the person who should have paid the tax (i) has been assessed in respect of the tax or any matter relating to the tax; or (ii) is under audit or investigation in respect of the undisclosed income or any matter relating to the undisclosed income.

40.

Section 42 of the Tax Procedures Act, 2015 is Amendment of amended in subsection (7) by inserting the words "within a section 42 of No.

period of thirty days" immediately after the words "the 29 of 2015.

Commissioner shall".

41.The Tax Procedures Act, 2015 is amended by Insertion of new inserting the following new section immediately after section 42A to section 42 No.

29 of 2015.

Appointment of 42A (1) The Commissioner may Value Added Tax appoint a person to withhold six per cent of withholding agent.

the taxable value on purchasing taxable supplies at the time of paying for the supplies and remit the same directly to the Commissioner.

(2) The Commissioner may, at any time, revoke the appointment of a tax 966 No.

38 Finance 2016 withholding agent made under subsection (1), if the Commissioner deems it appropriate to do so.

(3) Subsection (1) shall not apply to taxable supplies for official aid-funded projects.

(4) For the avoidance of doubt, the withholding of tax under subsection (1) shall not relieve the supplier of taxable supplies of the obligation to account for tax in accordance with this Act and the regulations.

(5) A person who, prior to the commencement of this section, was appointed to withhold tax under section 25A of the Value Added Tax Act, 2013 shall, notwithstanding the repeal of that section, be deemed to be a person appointed under subsection (1), provided that this provision shall not be construed to impose any penalty whatsoever on any such person who ceased to withhold tax for any period following the repeal of that section upto the 8th June, 2016.

42.

Section 47 of the Tax Procedures Act, 2015 is Amendment of amended section 47 of No.

29 of 2015.

(a) in subsection (1) (i) by deleting the expression, "one year" and substituting therefor the expression "five years".

(ii) by inserting the following new proviso No.

35 Provided that for value added tax the of 2013.

period of refund shall be as provided for under the Value Added Tax Act, 2013.

(b) in subsection (3), by inserting the words "within ninety days of receiving the application for a refund" immediately after the word "application".

967 2016 Finance No.

38 (c) by inserting the following new subsection immediately after subsection (4) (5) The Commissioner shall repay the overpaid tax within a period of two years from the date of application, failure to which the amount due shall attract an interest of 1% per month or part thereof of such unpaid amount after the period of two years.

43.

The Tax Procedures Act, 2015 is amended by Amendment of deleting section 48 and substituting therefor the following section 48 of new section No.

29 of 2015.

Erroneous refund of 48 (1) Where any tax has been refunded tax.

in error, the person to whom the refund has been erroneously made shall, on demand by the Commissioner, pay the amount erroneously refunded.

(2) Where a demand has been made for any amount of tax under subsection (1), that amount shall be deemed to be due from the person liable to pay the tax on the date upon which the demand is served upon him or her and if payment is not made within thirty days of the date of service, an interest equal to 1% per month or part thereof of such unpaid amount shall forthwith be due and payable, provided that the interest chargeable under this subsection shall not exceed one hundred percent of the tax originally due.

44.

Section 89 of the Tax Procedures Act, 2015 is Amendment of amended section 89 of No.

29 of 2015.

(a) in subsection (6) by inserting the words "or interest" immediately after the word "penalty" wherever it appears; (b) by deleting subsection (7) and substituting therefor with the following new subsection "(7) The Commissioner may, upon an application under subsection (6) or on the Commissioner's own motion and with the approval of the Cabinet Secretary, remit, in whole or in part, any penalty or interest payable by a person except a penalty imposed under section 85, 968 No.

38 Finance 2016 Provided that the remission of interest is by reason of (a) uncertainty as to any question of law or fact; (b) consideration of hardship or equity; or (c) impossibility or undue difficulty or expense, of recovery of tax.

45.

The Second Schedule to the Tax Procedures Act, Amendment of 2015 is amended the Second Schedule to No.

(a) in paragraph 2 by deleting the words "section 51 A 29 of 2015.

(a)" and substituting therefor the words "sections 35 (6B), 37 (6) and 51A (a)"; (b) in paragraph 3 by deleting the words "section 56" and substituting therefor the words "sections 55 and 56" PART VIMISCELLANEOUS PROVISIONS 46.

Section 29 of the Retirement Benefits Act, 1997 is Amendment of amended section 29 of No.

3 of 1997.

(a) by deleting subsection (2) and substituting therefor the following new subsection (2) A certificate of registration issued to a manager, custodian or administrator shall be valid from the date of issue and shall, unless suspended or revoked, remain valid.

(b) by deleting subsection (3) and substituting therefor the following new subsection (3) A manager, custodian or administrator shall pay such annual fee as may be prescribed by the Authority.

(c) by deleting subsection (4) and substituting therefor the following new subsection (4) A manager, custodian or administrator shall submit current audited financial statements, a list of the directors and top management, any changes in clientele and such further information as the Authority may request by the 30th September of every year.

(d) by adding the following new subsection immediately after subsection (4) 969 2016 Finance No.

38 (5) A manager, custodian or administrator shall communicate to the Authority any changes in shareholding, directorship or top management within thirty days after the change has occurred.

47.The Second Schedule to the Kenya Revenue Amendment of the Second Authority Act is amended in paragraph 2(1) by deleting the Schedule to words "excluding the ex officio members".

Cap.469.

48.Section 2 of the Capital Markets Act is amended by Amendment of section 2 of Cap.

inserting the following new definition in its proper 485A.

alphabetical sequence "online forex broker" means a body corporate duly licensed by the Authority to engage in the business of online trading in foreign exchange as an agent of investors in return for a commission and on its own account.

49.Section 12 of the Capital Markets Act is amended Amendment of section 12 of Cap.

in subsection (1) by inserting the following new paragraph 485A.

immediately after paragraph (j) (jj) the operations and supervision of online forex trading activities and online forex brokers.

50.Section 23 of the Capital Markets Act is amended Amendment of section 23 of Cap.

in subsection (1) by inserting the words "online forex 485A.

broker" immediately after the words "authorized depository".

51.

Section 31 of the Banking Act is amended Amendment of section 31 of the Cap.

488.

No.

14 of 2008.

(a) in subsection (3)(b), by inserting the Cap.

490.

words "institutions licensed under the Sacco Societies Act, 2008, institutions registered under the Co- operative Societies Act, public utility companies and any other institution mandated to share credit information under any written law" immediately after the expression "Microfinance Act, 2006"; (b) in subsection (4), by inserting the words "and any other institution mandated to share credit information under any written law" immediately after the words "public utility companies"; 970 No.

38 Finance 2016 (c) in subsection (5) Cap.

490.

(i) by inserting the words "or institutions licensed under the Sacco Societies Act, 2008, institutions registered under the Co-operative Societies Act, public utility companies and any institution mandated to share credit information under any written law" immediately after words "Microfinance Act" in the opening statement; and (ii) by inserting the following new paragraphs immediately after paragraph (d) (da) institutions licensed under the Sacco Societies Act, 2008; (db) institutions registered under Cap.

490.

the Co-operative Societies Act; (dc) public utility companies; (dd) any institution mandated to share credit information under any written law; and (d) by inserting the following new subsection immediately after subsection (5)- (6) Nothing in this Act shall prevent the cross-border sharing of credit information between (a) regulators or supervisory authorities and credit reference bureaus or entities performing similar roles; (b) institutions and credit reference bureaus or entities performing similar roles; (c) regulators or supervisory authorities and institutions; 971 2016 Finance No.

38 (d) institutions: Provided that (i) there is a mutual legal framework sharing of credit for the information; and (ii) the credit information is required for the discharge of a lawful duty or the performance of a lawful purpose by the person requesting for the information.

52.

Section 34 of the Banking Act is amended in Amendment of subsection (2) by inserting the words "in consultation with section 34 of Cap.

the Cabinet Secretary" immediately after words "Central 488.

Bank may".

53.

Section 55 of the Banking Act is amended in Amendment of subsection (2) by deleting section 55 of Cap.

488.

(a) the expression "five million Kenya shillings" and substituting therefor the expression "twenty million shillings"; (b) the expression "two hundred thousand shillings" and substituting therefor the expression "one million shillings"; and (c) the expression "twenty thousand shillings" and substituting therefor the expression "one hundred thousand shillings".

54.

The Alcoholic Drinks Control Act, 2010, is Repeal of section amended by repealing section 68A.

68A of No.

4 of 2010.

55.

Section 7 of the Kenya Deposit Insurance Act, Amendment to 2012 is amended section 7 of No.

10 of 2012.

(a) in subsection (1) (i) by inserting the following new paragraph immediately after paragraph (c) (cc) the Chief Executive Officer of the Kenya Bankers Association or his representative"; (ii)by deleting paragraph (d) and substituting therefor the following new paragraph 972 No.

38 Finance 2016 (d) subject to subsection (1A), five members appointed by the Cabinet Secretary by virtue of their knowledge and at least ten years' professional experience in banking, finance, insurance, commerce, law, accountancy or economics; and (b) by inserting the following new subsection immediately after subsection (1) (1A) A person appointed under subsection (1)(d) shall not be (a) a public officer; or (b)a person from a member institution licensed by the Central Bank of Kenya.

56.

Section 43 of the Kenya Deposit Insurance Act, Amendment of 2012 is amended in subsection (1) by inserting the words section 43 of No.

"in consultation with the Cabinet Secretary" immediately 18 of 2012.

after the words "The Central Bank shall".

57.

Section 37 of the Public Finance Management Amendment of Act, 2012 is amended section 37 of No.

18 of 2012.

(a) in subsection (3) by deleting the word "officer" and substituting therefor the word "officers"; (b) in subsection (5) by deleting the word "officer" and substituting therefor the word "officers".

58.

Section 66 of the Public Finance Management Amendment of Act, 2012 is amended in subsection (1) by deleting the section 66 of No.

word "officer" and substituting therefor the word 18 of 2012.

"officers".

59.

Section 193 of the Public Finance Management Amendment of Act, 2012, is amended in subsection (4) by deleting the section 193 of No.

words "not more than three years" and substituting therefor 18 of 2012.

the words "three years, renewable once for a further and final term of three years".

60.

Section 7 of the Tax Appeals Tribunal Act, 2013, Amendment of is amended by renumbering the existing provision as sub- section 7 of No.

section (1) and adding the following new subsection 40 of 2013.

(2) The Secretary referred to under subsection (1) shall (a) be knowledgeable in procedures of a tribunal; and (b) have a minimum of five years' experience in finance, economics or legal practice.

973 2016 Finance No.

38 61.

Section 11 of the Tax Appeals Tribunal Act, 2013 Amendment of is amended in subsection (1) by deleting the words section 11 of No.

"designated by the Cabinet Secretary" and substituting 40 of 2013.

therefor the words "appointed by the Tribunal".

62.

Section 13 of the Tax Appeals Tribunal Act is Amendment to amended section 13 of No.

40 of 2013 (a) in subsection (2), by deleting the word "clerk" and substituting therefor the word "Tribunal"; (b) in subsection (3), by inserting the words "for filing the notice of appeal and" immediately after the words "extend the time"; and (c) in subsection (4), by deleting the words "giving notice of appeal" and substituting therefor the words "filing the notice of appeal or submitting the documents".

63.

Section 15 of the Tax Appeals Tribunal Act, 2013 Amendment of is amended section 15 of No.

40 of 2013.

(a) in subsection (1), by deleting the word "clerk" and substituting therefor the word "Tribunal"; and (b) by inserting the following new subsections immediately after subsection (2)- (3)The Commissioner shall serve the appellant with a copy of the statement of facts and other documents required under this section within two working days from the date of submission to the Tribunal.

(4) The Tribunal may, upon application in writing by the Commissioner, extend the time for submitting and serving the statement of facts and the documents referred to in this section, where it is proved to the satisfaction of the Tribunal, that the delay is not inordinate or other reasonable cause that may have prevented the Commissioner from submitting and serving the statement of facts and the documents within the specified period.

64.

Section 25 of the Tax Appeals Tribunal Act, 2013 Amendment of is amended in subsection (1) by inserting the words "or by section 25 of No.

an advocate" immediately after the words "tax agent".

40 of 2013.

65.

The Tax Appeals Tribunal Act, 2013 is amended Repeal of section by repealing section 43.

43 of No.

40 of 2013.

974 No.

38 Finance 2016 66.

Section 4 of the Special Economic Zones Act, Amendment of 2015 is amended in subsection (6) by inserting the section 4 of No.

following new paragraph immediately after paragraph (i) 16 of 2015.

(j) convention and conference facilities.

67.

Section 35 of the Special Economic Zones Act, Amendment of 2015, is amended by deleting subsection (1) and section 35 No.

16 substituting therefor the following new subsection of 2015.

(1) All licensed special economic zones enterprises, developers and operators shall be granted tax incentives as specified in the respective tax laws.

68.

Section 2 of the Capital Markets Act, is amended Amendment of by inserting the following new definitions in their proper section 2 of Cap.

alphabetical sequence 485A.

"commodity" means (a) agricultural, livestock, fishery, forestry, mining or energy goods or any product that is manufactured or processed from any such goods; (b) financial instruments; (c) an index, right, or interest in any such commodity; (d) such other thing as the Cabinet Secretary may, by notice in the Gazette, determine to be the subject of a commodity contract; "commodity contract" includes (a) spot commodity contract; (b) commodity futures contract; and (c) such other contract or class of contracts as the Authority may, by regulations prescribe; "commodity market" means a market or facility licensed by the Authority or a facility, whether electronic or otherwise at which, offers or invitations to sell, purchase or exchange commodity contracts are regularly made on a centralized basis, being offers or invitations that are intended or may reasonably be expected to result directly or indirectly in the acceptance or making, respectively of offers to sell, purchase or exchange of commodity contracts but does not include- (a) the office or facilities of a commodity dealer or broker; 975 2016 Finance No.

38 (b) the office or facilities of a clearing house.

"spot commodity trading" means the purchase or sale of a commodity at its current market or spot price, where it is intended that such transaction results in the physical delivery of the commodity, and "spot commodity contract" shall be construed accordingly.

69.

Section 11 of the Capital Markets Act is Amendment of amended section 11 of Cap.

485A.

(a) in subsection (1) by inserting the word "commodities" immediately after the word "securities" wherever it appears in paragraph (b); (b) in subsection (3) (i) by inserting the words "commodity exchange" immediately after the words "securities exchange" appearing in paragraph (0; (ii) by inserting the following new paragraph immediately after paragraph (f)- "(fa) regulate spot commodity markets"; 70.

Section 12 of the Capital Markets Act is amended Amendment of in subsection (1) by inserting the following new paragraph section 12 of Cap.

immediately after paragraph (k) 485A.

(ka) spot commodity trading and commodity markets.

71.

The heading to Part III of the Capital Markets Act Amendment to is amended by deleting the word "securities".

Part III of Cap.

485A.

72.

The Capital Markets Act is amended in section 19 Amendment of by inserting the words "commodities exchange" section 19 of Cap.

immediately after the words "securities exchange" 485A.

wherever they appear.

73.

The Capital Markets Act is amended in section Amendment of section 19A of 19A by Cap.

485A.

(a) inserting the words "commodities exchange" immediately after the words "securities exchange"; (b) deleting the words "a securities exchange licence" and substituting therefor the words "an exchange licence".

976 No.

38 Finance 2016 74.

Section 20 of the Capital Markets Act is amended Amendment of by inserting the words "commodities exchange" section 20 of Cap.

immediately after the words "securities exchange" 485A.

wherever they appear.

75.

Section 21 of the Capital Markets Act is amended Amendment of by inserting the words "commodities exchange" section 21 of Cap.

immediately after the words "securities exchange" 485A.

wherever they appear.

76.

Section 22A of the Capital Markets Act is Amendment of amended section 22A of Cap.

485A.

(a) by inserting the words "commodities exchange" immediately after the words "securities exchange" wherever they appear; (b) by inserting the words "commodities markets" immediately after the words "securities markets" wherever they appear.

77.

Section 23 of the Capital Markets Act is amended- Amendment of section 23 of Cap.

(a) in subsection (1) by inserting the words 485A.

"commodity dealer", "commodity broker" immediately after the words "authorized depository"; (b) in subsection (2) by inserting the words "commodities exchange" immediately after the words "securities exchange".

78.

Section 25A of the Capital Markets Act is Amendment of amended in subsection (1) by inserting the words section 25A of "commodities or derivatives" immediately after the word Cap.

485A.

"securities" wherever it appears.

79.

Section 2 of the Betting, Lotteries and Gaming Act Amendment of is amended by inserting the following new definitions in section 2 of Cap.

their proper alphabetical sequence 131.

"Collector" means the Commissioner-General appointed under the Kenya Revenue Authority Act; "gaming revenue" means gross turnover less the amount paid out to customers as winnings; 80.

The Betting, Lotteries and Gaming Act is amended Insertion of new by inserting the following new section immediately after section 29A in section 29 Cap.

131.

977 2016 Finance No.

38 29A.

(1) There shall be a tax to be known as betting tax chargeable at the rate of seven point five per cent of the gaming revenue.

(2) The tax shall be paid to the Collector by the licensed bookmaker on the 20th day of the month following the month of collection.

81.

Section 37 of the Betting, Lotteries and Gaming Amendment of Act is amended section 37 of Cap.

131.

(a) in subsection (2) by deleting paragraph (a); (b) by deleting subsection 3.

Insertion of 82.

The Betting, Lotteries and Gaming Act is amended by inserting the following new section immediately after section new 44A section 44 in Cap.

131.

44A.

(1) There shall be a tax to be known as lottery tax chargeable at the rate of five per cent of the lottery turnover.

(2) The tax shall be paid to the Collector by a person authorized to promote the lottery on the 20th day of the month following the month of collection.

83.

The Betting, Lotteries and Gaming Act is amended Insertion of by inserting the following new section immediately after section 55A in section 55- Cap.

131.

55A.

(1) There shall be a tax to be known as gaming tax chargeable at the rate of twelve per cent of the gaming revenue.

(2) The tax shall be paid to the Collector by a person carrying on a gaming business on the 20th day of the month following the month of collection.

84.

The Betting, Lotteries and Gaming Act is amended Insertion of new by inserting the following new section immediately after section 59B in section 59A Cap.

131.

59B.

(1) There shall be a tax to be known as prize competition tax chargeable on the cost of entry to a competition which is premium rated at the rate of fifteen per cent of the total gross turnover.

(2) The tax shall be paid to the Collector by the licensed person on the 20th day of the month following the month of collection.

978 No.

38 Finance 2016 85.

Section 975 of the Companies Act is amended in Amendment of subsection (2) by deleting paragraph (b).

section 975 of No.

17 of 2015.

86.

Section 62 of the Consumer Protection Act is Amendment of amended by inserting the words "or where the lender is section 62 of No.

either a bilateral or multilateral foreign financial 46 of 2012.

institution" at the end of subsection (5).

.

Frequently asked questions

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