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8/7/2019 2010-2011_BUDGET (1)
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2010/2011 BUDGETTAXATION PROPOSALS
THEME:
TOWARDS INCLUSIVE AND
SUSTAINABLE RAPID ECONOMICGROWTH
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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
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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
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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
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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:
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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
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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
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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
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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
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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.
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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.
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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.
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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
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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
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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
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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
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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%
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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.
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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
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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
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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
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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
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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
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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.
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