Outgoing MPs change landscape for businesses

Business Daily Kenya:  The outgoing Parliament can pride itself for several bills which have had a direct knock on effect on the business e...

Business Daily Kenya: 

House on session. Photo/FILE

The outgoing Parliament can pride itself for several bills which have had a direct knock on effect on the business environment. The most recent being the approval of the Finance Bill 2017 last week in which, among others, MPs enacted a new 35 per cent tax on gaming firms, from the current rate of 7.5 per cent.

The legislators had refused to back a proposed 50 per cent gambling tax by President Uhuru Kenyatta, which in turn led to a delay in Amendment of Section 59 B of Cap 469 whose purpose is to discourage Kenyans from directing their focus on betting, lottery and gaming activities instead of productive economic engagement.

Henceforth, sports betting, lottery and competition operators will all face significantly hiked tax charges going forward. “The vice is likely to degenerate into a social disaster,” President Uhuru Kenyatta said in a statement.

The National Assembly also amended the law to fast track entities operating in the Special Economic Zones by enhancing tax incentives in what is expected to attract more investors through withholding taxes and capital expenditure deductions.

“The aim is to ensure that while investors come to generate money, they employ local manpower, pay taxes, and also attract more investors and make Kenya and Nairobi a regional hub,” said Francis Kamau, a partner at Ernst and Young.

Billed as one of the sectors with big economic impact yet underutilised is the blue economy, with a potential of up to Sh50 billion, Kamau estimates it has the ability employ 5,000 people both directly and indirectly.

“These can be achieved through Export Processing Zones in the coastal region if investors could be encouraged to set up infrastructure and machinery to fast track repairing of ships and even painting,” said the tax expert.

The Insurance Bill which entices international investors with Takaful — the Islamic equivalent of Insurance — is expected to deepen the region as financial centre by inclusion of Islamic insurance ideals.

“There is a lot of interest in the market and uptake has been massive. Most insurance companies want to have Takaful as part of their products,” Kamau said.

“The downside is that this Bill comes in late in the day because most companies already rolled out the product.” The Moveable Property and Security Rights Bill which was assented to by the President Uhuru will have a massive impact on the economy because it frees more items as security to enable people to get loans by use of moveable collateral.

It will particularly target the underground economy which is run by shylocks who have been leveraging on household goods and property to give loans to Kenyans.

“If more moveable items can be used to secure loans, this will open up borrowing facilities to more people and increase availability of investable funds among Kenyans,” said Sterling Capital Investment director John Kirimi, adding that the Bill intends to take care of that.

Among the ideals being espoused by the Public Private Partnership (Amendment) Bill 2016 was to recognise county governments as distinct contracting authorities, without burdening them with loans by encouraging the private sector to building infrastructure and get paid by the same.

To enhance the ease of doing business, Parliament moved the Companies (Amendment) Bill 2017 which among others interrogates the minimum requirements for foreigners want to establish base in Kenya.

The Attorney General had frozen the 30 per cent requirement in 2016. Discussions around the Petroleum (exploration, development and production) Bill, 2015 is out to ensure that local population within counties are rewarded from products mined.

As the country prepares for the export of the early oil less than two months to the General Election, issues to do with rehabilitation, community needs and sovereign fund discussions are still ongoing as Parliament breaks.

The post Outgoing MPs change landscape for businesses appeared first on Mediamax Network Limited.

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