FINANCE BILL, 2020
The government released the Finance Bill, 2020 (“the Bill”) on 30th April 2020, following close on the heels of the Tax Laws Amendment Act, 2020 (“TLA”). A number of the measures that were initially proposed but not included in the TLA, have reappeared in the Bill.
The Bill would normally be issued post the Annual Budget speech but following the ruling in Okiya Omtatah Okoiti v Cabinet Secretary, National Treasury & 3 others [2018] Eklr , which ruled that the Bill must be tabled on or before 30th April, the National Treasury issued it at the same time as the government’s expenditure estimates for the following fiscal year. Interestingly, the version of the Bill that was tabled seemed incomplete and did not contain any effective dates for the various changes proposed. The Treasury issued a more traditional, and perhaps proper, version in the following week.
We find ourselves in the unusual situation in 2020 of having three acts amending tax legislation: The Business Laws (Amendment) Act, 2020; the Tax Laws (Amendment) Act, 2020; and potentially the Finance Act 2020. This number of amendments, many of which are incoherent, is simply adding confusion to our tax legislation.
The TLA was largely designed to effect the President’s measures to cope with the current pandemic – tax rate reductions – but included several other amendments which we analysed in our newsflash dated 27th April 2020. Logically, and given the urgency of the President’s measures, perhaps a separate Bill should have been enacted to legislate the rate changes (with respect to the pandemic) and the Bill could have included all other changes. The removal of a number of exemptions in both the TLA and the Bill has raised concern with taxpayers and the Treasury has, unusually, issued a release justifying their thinking.
The Bill that was originally tabled in Parliament was incomplete; it seemed to be almost as though it dawned on the Treasury that they need to submit it by 30th April. A revised and complete version was tabled subsequently. The question then arises as to whether they have the authority to withdraw what was first submitted and resubmit. The Public Finance Management Act, Act No. 18 of 2012 (the PFMA) provides that the Finance Bill must be submitted on or before 30th April every year and it has to be assented on before 30th June.
The PFMA also provides that not later than ninety (90) days of the passing of the Appropriation Bill, the National Assembly shall consider and approve the Finance Bill with or without amendments. The Appropriation Bill was published vide Kenya Gazette Supplement number 55 and dated 27th April 2020. It does seem that under the PFMA, the Treasury cannot amend what has been submitted post 30th April. Any amendments to the Bill must now be done by Parliament. However, given that a revised version has been issued and submitted, this part of the law has been ignored.
We have highlighted and analyzed the Finance Bill, 2020 here.