8/7/2019 2010-2011_BUDGET (1)

1/25

2010/2011 BUDGETTAXATION PROPOSALS

THEME:

TOWARDS INCLUSIVE AND

SUSTAINABLE RAPID ECONOMICGROWTH

8/7/2019 2010-2011_BUDGET (1)

2/25

OBJECTIVES

Put the economy into a high and rapid growth path

Scale up projects and programs started in 2009 so thatevery part of the

country can benefit

Promote youth empowerment and employment

Promote accountability, responsibility and audit toenhance budget implementation

8/7/2019 2010-2011_BUDGET (1)

3/25

HIGHLIGHTSCreating an enabling business environment

Value addition in Agriculture, Fisheries, Livestock

Increased CDF to 14 BillionMSMES devolved fund set at 3.8Billion

Update of relevant laws

Infrastructure improvement

Youth empowermentGood governance and political stability

Reduction in cost of energy

Enhancing pension payments

Listing of NSE (Demutualization)

Accommodation of Islamic Banking into mainstream

banking

Taxation measures

8/7/2019 2010-2011_BUDGET (1)

4/25

FINANCIAL PROJECTION 2010/11

FUNDING

Ordinary revenue 610 BillionAppropriation AID/LATF 71 Billion

Development receipts 151 Billion

Total 832 Billion

EXPENDITURE

Recurrent Expenditure 675 Billion

Development Expenditure 321 Billion

Contingency Fund 2 Billion

TOTAL 998 Billion

DEFICIT 166 BillionDEFICITFINANCING

From Domestic Borrowing 105 Billion

Roll Over of Domestic debt 61 Billion

8/7/2019 2010-2011_BUDGET (1)

5/25

GENERAL ECONOMY

Expected growth of 4.5% -5.7% in 2010/11

giving an average of 5.1 % due to:

Increased investment in key sectors e.g.

agriculture, services, infrastructure, health and

education

Targeted strategic development interventions

in:

8/7/2019 2010-2011_BUDGET (1)

6/25

AGRICULTURE

Expansion of irrigated agriculture and diversity

into new areas

Employment of extension officers per

constituency

Fixed and mobile grain dryers

Milling plants for rice growing areas

Warehouse receipting by NCPB

Fish processing and markets

8/7/2019 2010-2011_BUDGET (1)

7/25

LIVESTOCKDam construction in arid areas and mini-flood areas

Electronic animal tagging

Construction of slaughterhouses to be managed by

farmers through co-operatives

Employment of veterinary officers

Motor vehicles for the veterinary officers

Establishing feedlots of Disease free zones and feed reserves to

expand beef export

Construction of 5 mini leather processing factories to encourage

growth of leather industry

8/7/2019 2010-2011_BUDGET (1)

8/25

ENERGY

Contain volatility in the energy sector byreviewing Energy Regulatory Commission to look

into power cost predictability

Licensing of power producers to be fast tracked

15.6Billion to enhance the National Distribution

Network

11.6B to explore Geothermal and Coal recourses

5.4B for Rural Electrification

Deployment of Biomass power from municipality

waste

8/7/2019 2010-2011_BUDGET (1)

9/25

ENVIRONMENT

Develop a carbon credit Investmentframework which aims at establishment of a

carbon Emission Trading Scheme (ETS)

Provision of 30,000 shillings each for 50

schools in every constituency towards planting

of trees in conservation of the environment in

order to mitigate climate change

8/7/2019 2010-2011_BUDGET (1)

10/25

YOUTH EMPOWERMENTANDSMEs

E-registry for small business to apply and pay for licenses online

Four microfinance banks licensed, introduction of agency banking,

and credit reference bureau

Expansion of training technical institutes

Expand training facilities in national polytechnics and university

colleges

Upgrade all public information, science and technology colleges

Establish a revolving fund of 3.8B through credit facility agreementwith selected banks

Use ICT and M-banking for effective and faster disbursement of

funds to youth and business people and introduce financial

products like micro insurance, pension payments, tax payments

and other social payments.Remove withholding tax on lease rentals to improve cash flow

position and facilitate growth of business.

8/7/2019 2010-2011_BUDGET (1)

11/25

INFRASTRUCTURE

Prioritized infrastructure development given 182Billion

78.8Billion to do roads; 700m for Voi-Taveta road,

4.2 B to open up Ethiopia from Isiolo, 23.5B for

general road maintenanceConstruction of standard gauge double railway

from Mombasa to Malaba

Nairobi Commuter Train design ready and 1.9

Billion set aside

Make Mombasa port a port of choice by facilitating

faster, efficient and competitive clearance of cargo.

8/7/2019 2010-2011_BUDGET (1)

12/25

HEALTH1 Billion for additional 15 nurses, 5 public Health

technicians in each constituency265M for purchase of Motorcycles, operations and

maintenance expenses

Employment of 10 community health workers and

provision of medical supplies in each constituency

5 million for each constituency towards expanding health

care facilities to include wards for children and adults

300 ambulances for use in health care facilities

4.4 billion for purchase of drugs and 900 million for ARVs

Strengthening KEMSASs procurement capacity and

accountability.

8/7/2019 2010-2011_BUDGET (1)

13/25

TAXATIONMEASURESPromoting Agriculture, food security and rural

developmentEncouraging growth and industries for faster

development

Promoting development of property market andenterprise

Further ensuring equity and fairness in our tax

system

Deepening tax reforms and enhancing governance

Strengthening financial system for sustainable

development

8/7/2019 2010-2011_BUDGET (1)

14/25

AGRICULTURE

Lowered rate of duty on wheat grain from 35%

to 10% for a period of one year

Lowered rate of duty on all imported rice from

75% to 35% for a period of one year

8/7/2019 2010-2011_BUDGET (1)

15/25

POULTRY

Exempted import duty on parent stock for

chicken breeding

Farm work capital deduction increased from

50% to 100% as an incentive to promoting

investment in farming and encourage

employment

8/7/2019 2010-2011_BUDGET (1)

16/25

GROWTH OFINDUSTRIESFOR FASTER

DEVELOPMENTImport duty on Aluminium conductors and cables increased

from 10% to 25%, to discourage import since they are locallyproduced in sufficient quantify

Import duty removed on flat rolled products of iron or non alloy

steel; coated or plated with tin which are key inputs in the

iron and steel industries

Import duty on petroleum coke removed; which is raw material

used in production of cement

Import duty removed on prepared driers and pigments which

are used for manufacture of paintsDuty remission on all industrial input used in the manufacture of goods

which are duty free for regional integration

Removal of import duty on lamps and bulbs using Light Emitting Diode

(LED) technologies; to make energy saver bulbs cheaper

8/7/2019 2010-2011_BUDGET (1)

17/25

PROPERTYMARKETANDENTERPRISE

Stamp duty penalty reduced from 25% for every quarter to

5%; penalty to be capped on principal amountStamp duty on mortgage, charges and debentures reduced

form 0.2% to 0.1% i.e. from Kshs.2 to Kshs. 1 for every

Kshs.1000

Penalty on land rent reduced from 2% to 1% per month

Amnesty on land rent penalties accumulated up to and

included 30th June 2010

Mortgage finance companies to operate current accountsThreshold of core capital that banks are allowed to invest

in mortgage finance raised from 25% to 40%

8/7/2019 2010-2011_BUDGET (1)

18/25

EQUITYANDFAIRNESSIN TAXSYSTEM

Abolishing payment of advance tax by PSV

drivers and conductors

Payment made to retirees to be under

withholding instead of PAYE

Gratuity paid to contract employees will be tax

allowable if channelled through a retirement benefit

scheme

Increase in excise duty on malt beer from kshs 54 to

65 per litre and non-malt from kshs 45 to 55 per

litre.

8/7/2019 2010-2011_BUDGET (1)

19/25

DEEPENINGTAX REFORMSANDENHANCING

GOVERNANCE

Gazettement of tax procedure or formalities whichshould be done online and to further specify those

who should file them online

Withholding of VAT by Ministry of Roads reduced from

16% to 8%

Task force to come up with new VAT Act to be tabled by

June 2011

Amnesty for Kenyans in Diaspora for incomes prior to2010; to encourage investment at home

Improved PAYE dispute resolution system - online filing

of PAYE to be enhanced

8/7/2019 2010-2011_BUDGET (1)

20/25

DEEPENINGTAX REFORMSANDENHANCING

GOVERNANCE (CONTINUED)

Additional measures to be taken to deal with tax planning

schemes involving interest-free loans advanced to local

businesses by their non-resident association

Enhancement of capacity of KRA in terms of staff skills in the

area of transfer pricing

Extension of double taxation treaties; already done with EAC,

Mauritius, Iran and Kuwait

KACC to remit all public resources recovered to consolidated

fund or the permanent secretary/treasury to ensure thatassets recovered are protected

Director General to consider recommendation from

institutions such as KACC, CID and the controller and Auditor

General for debarment

8/7/2019 2010-2011_BUDGET (1)

21/25

STRENGTHENINGFINANCIAL SYSTEMSFOR

SUSTAINABLEDEVELOPMENT

Amendment of insurance Act to require directors of insurance

companies which default in remitting statutory contribution be

severally and jointly liable for the payment of the outstanding

contributions together with the applicable interests.

Amendment of Insurance (motor vehicle Third Party Risk) Act to

introduce a structured compensation scheme similar to the one

under the work INJURY Benefit ActAmendment of Insurance Act to expand ownership of insurance

agency business to the East Africa Community Citizens. To allow

citizens from other EAC partner states to act as insurance agents in

Kenya

8/7/2019 2010-2011_BUDGET (1)

22/25

STRENGTHENINGFINANCIAL SYSTEMSFOR

SUSTAINABLEDEVELOPMENT(CONTINUED)

Amendment of Banking Act to give powers to Deposit

Protection Fund Board (DPFB) to hold and sell unrealizable

securities after winding up an institution

Amendment of banking act to provide for prompt corrective

action so as to avail more teeth for the Central Bank of Kenya

to enhance banking sector

8/7/2019 2010-2011_BUDGET (1)

23/25

STRENGTHENINGFINANCIAL SYSTEMSFOR

SUSTAINABLEDEVELOPMENT(CONTINUED)

Amendment of microfinance Act to facilitate use of

3rd party to deposit taking Microfinance institution

Amendment of CBK Act to allow the CBK to share or

disclose information obtained from surveillance ofauthorized dealers with the aforementioned

agencies

Amendment of CBK Act to facilitate Islamic

transaction in the management of liquidity in the

banking sector

8/7/2019 2010-2011_BUDGET (1)

24/25

STRENGTHENINGFINANCIAL SYSTEMSFOR

SUSTAINABLEDEVELOPMENT(CONTINUED)

Amendment to law to allow the

demutualization of the NSE. The planned

demutualization will culminate with the listing

of the stock exchange to allow the public to

own stake in the exchange

Shortening of number of days to determine

and pay pension benefit after a member hasretired from 60 days to 30 days.

8/7/2019 2010-2011_BUDGET (1)

25/25