Kenyan Bankers Feel Excluded From Tax Policy Setting-New Survey Says

Public participation in the legislative process is a fundamental constitutional principle. The constitution dictates that all those affected by a decision ought to have a say in the decision-making process.

While this is a mandatory requirement, a new survey done by PricewaterhouseCoopers (PwC) has revealed that a majority of the banking sector members feel excluded from policy settings.

According to the report dubbed ‘Total Tax Contribution of the Kenya Banking Sector’ by PwC, 81.1 percent of the survey participants either disagreed or strongly disagreed with the statement that there is predictability in the process of making changes to the tax framework and inclusion of industry stakeholders in the process.

Participants of the survey highlighted that stakeholders’ view if sought, is not usually considered when making tax reforms.

“This lack of engagement of the stakeholders is evident from numerous tax proposals over the last few years that have either been blocked by the courts or dropped altogether,” PwC said in the report further highlighting scenarios where policy changes were made without stakeholder participation; the banks for this case.

In most responses, participants stated that they feel excluded from the tax policy setting. However, one participant said that the “government is making genuine attempts to include industry stakeholders in the process of amending/introducing new/existing laws.”

Most banks that took part in the survey believe the current tax framework does not support expansion with some citing the lack of double tax treaties or other incentives for companies looking to expand within the East African region.

“The Kenyan tax framework does not support regional expansion. Each of the COMESA member states have their own tax framework.”

Most financial institutions that participated in the survey believe that the government could do more to encourage growth and regional expansion.

Regarding misalignment in accounting and tax definitions, 83.8 percent of participant banks believe their needs to be an alignment to make tax structures more straightforward and easier to implement. “There is limited alignment between accounting and tax definitions leading to disputes and higher compliance costs,” a participant noted.

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