SPECIAL ISSUE
Kenya Gazette Supplement No. 121 (Acts No. 10)
REPUBLIC OF KENYA
–––––––
KENYA GAZETTE SUPPLEMENT
ACTS, 2018
NAIROBI, 21st September, 2018
CONTENT
Act—
PAGE
The Finance Act, 2018 ……………………………………………………………………… 165
PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI
!
165
THE FINANCE ACT, 2018
No. 10 of 2018
Date of Assent: 21st September, 2018
Date of Commencement: See Section 1
AN ACT of Parliament to amend the law relating to
various taxes and duties and for matters incidental
thereto
ENACTED by the Parliament of Kenya, as follows—
PART I— PRELIMINARY
1. This Act may be cited as the Finance Act, 2018,
and shall come into operation, or be deemed to have come
into operation, as follows—
Short title and
commencement.
(a) sections 48, 49, 50, 54, 56, 58, 60, 61, 62, 63, 64,
65, 66, 67, 68, and 78, on the 1st October, 2018;
(b) sections 4, 6, 7, 11(a), and 11(c) on the 1st
January, 2019;
(c) all other sections on the 1st July, 2018.
PART II—INCOME TAX
2. Section 2 of the Income Tax Act is amended—
(a) by inserting the following new definition in proper
alphabetical sequence—
“demurrage charges” means the penalty paid for
exceeding the period allowed for taking delivery of goods,
or returning of any equipment used for transportation of
goods”.
(b) by deleting the definition of the word “winnings”
and substituting therefor the following
definition—
“winnings” includes winnings of any kind and a
reference to the amount or the payment of winnings shall
be construed accordingly;
Amendment of
section 2 of Cap.
470.
3. Section 7 of the Income Tax Act is amended by
deleting subsection (1) and substituting therefor the
following new subsection –
Amendment of
section 7 of Cap.
470.
!
Finance 2018
166
No. 10
(1) For the purpose of section 3(2)(b)—
(a) a dividend paid by a resident company shall be
deemed to be income of the year of income in
which it was payable;
(b) an amount shall be deemed to be a dividend
distributed by a company to a shareholder where –
(i) any cash or asset is distributed or transferred
by that company to or for the benefit of that
shareholder or any person related to that
shareholder;
(ii) the shareholder or any person related to that
shareholder is discharged from any
obligation measurable in money which is
owed to that company by that shareholder or
related person;
(iii) the amount is used by that company in any
other manner for the benefit of the
shareholder or any person related to that
shareholder;
(iv) any debt owed by the shareholder or any
person related to that shareholder to any third
party is paid or settled by that company;
(v) the amount represents additional taxable
income or reduced assessed loss of that
company by virtue of any transaction with
the shareholder or related person to such
shareholder, resulting from an adjustment.
4. The Income Tax Act is amended by repealing
section 7A and replacing it with the following new
section—
Amendment of
section 7A of
Cap. 470.
Dividend distributed out
of untaxed gains or
profits.
7A. Where a dividend is distributed
out of gains or profits on which no tax is
paid, the company distributing the
dividend shall be charged to tax in the
year of income in which the dividends are
distributed at the resident corporate rate of
tax on the gains or profits from which
such dividends are distributed:
Provided that this section shall not
apply to registered collective investment
schemes.
2018 Finance !
167
No. 10
5. Section 10 of the Income Tax Act is amended in
subsection (1) by adding the following new paragraphs
immediately after paragraph (h)—
(i) demurrage charges; and
(j) an insurance premium.
Amendment of
section 10 of Cap.
470.
6. The Income Tax Act is amended by repealing
section 12C and replacing it with following new section –
Amendment of
section 12C of
Cap. 470.
Presumptive tax.
12C. (1) Notwithstanding any other
provision of this Act, a tax to be known as
presumptive tax shall be payable by a
resident person whose turnover from
business does not exceed five million
shillings during a year of income.
(2) The presumptive tax shall apply to
persons who are issued or liable to be issued
with a business permit or trade license by a
county government in a year of income.
(3) A person liable to pay tax under
subsection (1) may, by notice in writing,
addressed to the Commissioner, elect not to
be subject to the provisions of this section in
which case the other provisions of this Act
shall apply to such person.
(4) The due date for payment of tax
under subsection (1) shall be at the time of
payment for the business permit or trade
license or renewal of the same.
(5) Notwithstanding subsection (1),
presumptive tax shall not apply to income
derived from—
(a) management and professional
services; or
(b) rental business; or
(c) incorporated companies.
7. Section 15 of the Income Tax Act is amended in
subsection (2) by inserting the following new paragraph
immediately after paragraph (aa)—
(ab) thirty percent of electricity cost incurred by
manufacturers in addition to the normal
Amendment of
Section 15 of Cap
470
!
Finance 2018
168
No. 10
electricity expense, subject to conditions set by
the Ministry of Energy.
8. Section 19 of the Income Tax Act is amended by
inserting the following new subsection immediately after
subsection (6A)—
(6B) For the avoidance of doubt, the gains arising
from the transfer of property by an insurance company
other than property connected to life insurance
business shall be taxed in accordance with the
provisions of the Eighth Schedule.”
9. Section 34 of the Income Tax Act is amended in
subsection (2) by inserting the following paragraphs
immediately after paragraph (m)—
(n) demurrage charges; or.
(o) an insurance premium except insurance
premium paid for insurance of aircraft.
Amendment of
section 34 of Cap.
470.
10. Section 35 of the Income Tax Act is amended by –
(a) in subsection (1), by inserting the following
paragraph immediately after paragraph (l)—
(m) demurrage charges;
(n) an insurance premium except insurance
premium paid for insurance of aircraft;
(b) inserting the following new subsection
immediately after subsection (5)—
Amendment of
section 35 of Cap.
470.
(5A) The Commissioner shall pay the tax
deducted from winnings under subsection (1)
(i) and (3) (h) into the Sports, Arts and Social
Development Fund established under section
24 of the Public Finance Management Act,
2012.
11. The Third Schedule to the Income Tax Act is
amended—
(a) in paragraph (2), by adding the following new
subparagraph immediately after subparagraph (j)-
(k) in the case of a company engaged in
business under a special operating framework
arrangement with the Government, the rate of tax
shall be to the extent provided in the arrangement.
Amendment of
the Third
Schedule to Cap.
470.
2018 Finance !
169
No. 10
(b) in paragraph 3, by inserting the following new
subparagraphs immediately after subparagraph
(n)—
(o) demurrage charges, paid to ship operators,
twenty per cent of the gross amount payable;
(p) an insurance premium, five per cent of the
gross amount payable; and
(c) by deleting paragraph 9 and substituting therefor
the following new paragraph—
9. The rate of presumptive tax shall be an
amount equal to fifteen percent of the amount
payable for a business permit or trade licence
issued by a County Government:
Provided that the tax charged shall be final.”
PART III— VALUE ADDED TAX
12. Section 2 of the Value Added Tax Act, 2013 is
amended by deleting the definition of the expression
“electronic notice system”.
Amendment of
section 2 of No.
35 of 2013.
13. Section 5 of the Value Added Tax Act, 2013 is
amended in subsection (2) by inserting the following new
paragraph immediately after paragraph (a)-
(aa) in the case of goods listed in section B of Part I of
the First Schedule, eight percent of the taxable
value, effective from the date of assent:
Provided that—
(i) the taxable value in respect of these goods
shall exclude excise duty, fees and other
charges; and
(ii) despite section 1 of the Finance Act, 2018,
this paragraph comes into effect upon
enactment of the Supplementary
Appropriation (No.2)Act, 2018.
Amendment of
section 5 of No.35
of 2018
14. Section 13 of the Value Added Tax Act, 2013 is
amended by deleting subsection (2).
Amendment of
section 13 of No.
35 of 2013.
15. Section 16 of the Value Added Tax Act, 2013 is
amended by deleting subsection (6) and substituting
therefor the following new subsection—
Amendment of
section 16 of No.
35 of 2013.
!
Finance 2018
170
No. 10
(6) A credit or debit note issued under this section
shall be in the prescribed form.
16. The Value Added Tax Act, 2013 is amended by
repealing section 40.
Repeal of section
40 of No. 35 of
2013.
17. The Value Added Tax Act, 2013 is amended by
repealing section 41.
Repeal of section
41 of No. 35 of
2013.
18. Section 44 of the Value Added Tax Act, 2013 is
amended by deleting subsections (2), (3), (4) and (5).
Amendment of
section 44 of No.
35 of 2013.
19. The First Schedule to the Value Added Tax Act,
2013 is amended—
(a) in section A of Part I—
(i) by deleting the expressions “1001,” and “and
1003” appearing in paragraph 25;
(ii) by inserting the words “used for the
manufacture of goods” at the end of
paragraph 27;
(iii) by deleting paragraph 28;
(iv) by inserting the tariff Nos. “1213.00.00,
1214.10.00 and 2303.20.00” in paragraph 43 in
proper sequence;
(v) by deleting paragraph 45 and substituting
therefor the following new paragraph—
45. Specialized equipment for the
development and generation of solar and
wind energy, including deep cycle batteries
which use or store solar power.
(vi) by deleting the words “primary school laptop
tablets” appearing in paragraph 53 and
substituting therefor the word “computer”;
(vii) by deleting paragraph 63 and substituting
therefor the following new paragraph—
63. Taxable goods for the direct and
exclusive use in the construction and
equipping of specialized hospitals with a
minimum bed capacity of fifty, approved by
the Cabinet Secretary upon recommendation
by the Cabinet Secretary responsible for
Amendment of
First Schedule to
No. 35 of 2013.
2018 Finance !
171
No. 10
health who may issue guidelines for
determining eligibility for the exemption.
(viii) by deleting paragraph 64;
(ix) by deleting paragraph 92;
(x) in paragraph 93, by inserting the words “and
equipment” immediately after the word
“materials”;
(xi) by deleting paragraph 98;
(xii) by adding the following new paragraphs—
101. Alcoholic or non-alcoholic
beverages supplied to the Kenya Defence
Forces Canteen Organization.
102. Goods imported or purchased locally
for direct and exclusive use in the
implementation of projects under a special
operating framework arrangements with the
Government.
103. Hearing aids, excluding parts and
accessories, of tariff No.9021.40.00.
104. One personal motor vehicle,
excluding buses and minibuses of seating
capacity of more than eight seats, imported by
a public officer returning from a posting in a
Kenyan mission abroad and another motor
vehicle by his spouse and which is not
exempted from Value Added Tax under the
First Schedule:
Provided that the exemption under this item
shall not apply—
(a) unless the officer is returning to Kenya
from a posting in a Kenyan mission
abroad upon recall;
(b) unless, in the case of an officer’s spouse,
the spouse accompanied the officer in the
foreign mission and is returning with the
officer;
(c) if the officer or the spouse has either
enjoyed a similar privilege within the
previous four years from the date of
importation or has imported a motor
!
Finance 2018
172
No. 10
vehicle free of duty under item 6 of Part
A of this Schedule;
(d) unless the vehicle is imported within
ninety days of the date of arrival of the
officer or spouse or such longer period,
not exceeding three hundred and sixty
days from such arrival as the
Commissioner may allow; and
(e) to a State officer.
(b) in Part II—
(i) by deleting item (n) of paragraph 1; and
(ii) by adding the following new paragraphs—
29. Postal services provided through the
supply of postage stamps, including rental of
post boxes or mail bags and any subsidiary
services thereto.
30. Asset transfers and other transactions
related to the transfer of assets into real
estates investment trusts and asset backed
securities.
31. Services imported or purchased
locally for direct and exclusive use in the
implementation of projects under special
operating framework arrangements with the
Government.
20. The Second Schedule to the Value Added Tax
Act, 2013 is amended in—
(a) Part A by inserting the following new paragraph
immediately after paragraph 13A—
13B. The supply of maize (corn) flour,
cassava flour, wheat or meslin flour and maize
flour containing cassava flour by more than ten
percent in weight.
(b) Part C by deleting tariff No. 3004.40.00 and the
corresponding description and inserting the
following—
Amendment
of Second
Schedule to
No. 35 of
2013.
Tariff No. Description
3004.41.00 Containing ephedrine or its salts
2018 Finance !
173
No. 10
3004.42.00 Containing pseudoephedrine (INN) or its
salts
3004.43.00 Containing norephedrine or its salts
3004.49.00 Other
PART IV—TAX APPEALS TRIBUNAL
21. Section 10 of the Tax Appeals Tribunal Act, 2013,
is amended in subsection (3) by deleting the words “the
proceedings shall be adjourned, and”.
Amendment of
section 10 of No.
40 of 2013.
22. Section 13 of the Tax Appeals Tribunal Act, 2013,
is amended by inserting a new subsection as follows-
(8) The parties to an appeal may apply, in writing,
to the Tribunal to settle the dispute out of the Tribunal
and in such a case, the time taken to resolve or
conclude the settlement out of the Tribunal shall be
excluded when calculating the period contemplated in
subsection (7).
Amendment of
section 13 No. 40
of 2013.
PART V—EXCISE DUTY
23. Section 6 of the Excise Duty Act, 2015 is amended
in subsection (5) by deleting the expression “section 34”
and substituting therefor the expression “section 36”.
Amendment of
section 6 of No.
23 of 2015.
24. Section 7 of the Excise Duty Act, 2015 is amended
by deleting subsection (5) and substituting therefor the
following new subsection –
(5) An exemption granted under this section shall
apply if the Commissioner is satisfied that—
Amendment of
section 7 of Act
No. 23 of 2015.
(a) the goods referred to in subsection (1)(a) have
been received and consumed by the exempt
person; and
(b) excisable goods or services for export under
subsections (1)(b) and (c) have not been, and shall
not be consumed in Kenya.
25. Section 10 of the Excise Duty Act, 2015 is
amended by deleting the expression “every two years” and
substituting therefor the word “once every year”.
Amendment of
section 10 of No.
23 of 2015.
26. Section 20 of the Excise Duty Act, 2015 is
amended in subsection (1) by inserting the words “Subject
to section 23” immediately before the words “The
Commissioner”.
Amendment of
section 20 of No.
23 of 2015.
!
Finance 2018
174
No. 10
27. Section 21 of the Excise Duty Act, 2015 is
amended in subsection (1) by deleting paragraph (d).
Amendment of
section 21 of No.
23 of 2015.
28. The Excise Duty Act, 2015 is amended by
repealing section 23 and replacing it with the following
new section—
Repeal and
replacement of
section 23 of No.
23 of 2015.
Commissioner to
notify licensee prior to
suspension of license.
23. (1) Where the Commissioner seeks
to suspend a licence under this Act, the
Commissioner shall give the licensee twentyone
days’ notice prior to the suspension,
giving grounds on which the suspension shall
be done.
(2) A notice issued under this section
may require the licensee to remedy any
circumstances which may be required to be
remedied.
(3) Where a licensee fails to comply
with the requirements indicated in the notice
issued under this section, the Commissioner
may proceed to suspend the licence under
section 20.
(4) Despite any other provision of this
Act, the Commissioner may suspend a licence
,without notice, where the licensee—
(a) has engaged in tax fraud;
(b) has been found in possession of, or
using, counterfeit stamps on
excisable goods;
(c) has been found in possession of
goods bearing counterfeit stamps; or
(d) has violated any regulations relating
to health and safety, standards or
packaging of goods.
29. Section 36 of the Excise Duty Act, 2015 is
amended by inserting the following new subsection
immediately after subsection (4)—
(5) The Commissioner shall pay into the Sports,
Arts and Social Development Fund established under
the Public Finance Management Act, 2012 to support
social development including universal health care
Amendment of
Section 36 of No.
23 of 2015
2018 Finance !
175
No. 10
sixteen percent of the excise duty paid in respect of
money transfer by cellular phone service providers.
30. Section 38 of the Excise Duty Act, 2015 is
amended in subsection (1)—
(a) by inserting the words “or five million shillings,
whichever is higher” immediately after the word
“licensed” appearing in paragraph (a).
(b) by inserting the words “or five million shillings,
whichever is higher” immediately after the word
“payable” appearing in paragraph (b).
Amendment of
section 38 of Act
No. 23 of 2015.
31. Section 39 of the Excise Duty Act, 2015 is
amended—
(a) in subsection (1) by deleting the expression “26(1)
or (28(4)” and substituting therefor the expression
“or 26(1)”.
(b) by inserting the following new subsection
immediately after subsection (5) –
(6) Any plant or excisable goods or any
materials, in respect of which an offence has been
established in relation to sections 15,18,19, or 28
shall, in addition to any other penalty imposed
under this Act, be forfeited to the Commissioner.”
Amendment of
section 39 of No.
23 of 2015.
32. The First Schedule to the Excise Duty Act, 2015 is
amended—
(a) in Part I—
(i) by deleting tariff No. 2710.19.22 and the
corresponding tariff description and rate of
duty in paragraph 1 and substituting therefor
the following—
Amendment of
First Schedule to
No. 23 of 2015.
Tariff No. Tariff Description Rate
2710.19.22 Illuminating Kerosene
per 1000l @ 20degC
Ksh
10,305.00
(ii) by deleting the expression “Waters (excluding
water of tariff No. 2201.90.00) and other nonalcoholic
beverages not including fruit or
vegetable juices” appearing in paragraph 1 and
substituting therefor the following—
!
Finance 2018
176
No. 10
“Bottled or similarly packaged waters and
other non-alcoholic beverages, not including
fruit or vegetable juices”.
(iii) by deleting the description “Motor vehicles
excluding locally assembled motor vehicles
and school buses for use by public schools of
tariff heading 87.02, 87.03 and 87.04”and rate
of excise duty thereof and substituting therefor
the following new items –
Description Rate of
Excise
Duty
Motor vehicles (excluding locally
assembled motor vehicles, school
buses for use by public schools, and
motor vehicles of tariff no.
8703.24.90 and 8703.33.90) of tariff
heading 87.02, 87.03 and 87.04
20%
Motor vehicles of tariff no.
8703.24.90 and 8703.33.90
30%
Sugar confectionery (including white
chocolate) of tariff heading 17.04;
chocolate in blocks, slabs or bars of
tariff Nos. 1806.31.00, 1806.32.00,
1806.90.00
KSh. 20
per kg
(iv) by deleting the expression “every two years”
in paragraph 2 (1) and substituting therefor the
words “at the beginning of every financial
year”; and
(v) by deleting the expression “column 2 of” in
paragraph 2 (2).
(b) in Part II—
(i) by deleting paragraph 1 and substituting therefor
the following new paragraph—
1. Telephone and internet data services shall be
charged excise duty at a rate of fifteen percent
of their excisable value.
(ii) by deleting paragraph 2 and substituting
therefor the following new paragraph —
2018 Finance !
177
No. 10
2. Excise duty in fees charged for money
transfer services by banks, money transfer
agencies and other financial service providers
shall be twenty percent of their excisable value
(iii) by deleting paragraph 3 and substituting
therefor the following new paragraph—
3. Excise duty on fees charged for money
transfer services by cellular phone service
providers, shall be twelve percent of the
excisable value.
(iv) by deleting paragraph 4 of the Act and
substituting therefor the following new
paragraph–
4. Excise duty on other fees charged by
financial institutions shall be twenty percent of
their excisable value.
33. The Second Schedule to the Excise Duty Act,
2015, is amended in Part A by adding the following new
paragraphs—
12. Alcoholic or non-alcoholic beverages supplied
to the Kenya Defence Forces Canteen Organization.
13. Goods imported or purchased locally for direct
and exclusive use in the implementation of projects
under special operating framework arrangements with
the Government.
14. One personal motor vehicle, excluding buses
and minibuses of seating capacity of more than eight
seats, imported by a public officer returning from a
posting in a Kenyan mission abroad and another motor
vehicle by his or her spouse and which is not
exempted from excise duty under item 6 of Part A of
the Second Schedule:
Provided that the exemption under this item shall not
apply—
(a) unless the officer is returning to Kenya from a
posting in a Kenyan mission abroad upon recall;
(b) unless, in the case of an officer’s spouse, the
spouse accompanied the officer in the foreign
mission and is returning with the officer;
(c) if the officer or the spouse has either enjoyed a
similar privilege within the previous four years
Amendment of
Second Schedule
to No. 23 of 2015.
!
Finance 2018
178
No. 10
from the date of importation or has imported a
motor vehicle free of duty under item 6 of Part A
of this Schedule;
(d) unless the vehicle is imported within ninety days
of the date of arrival of the officer or spouse or
such longer period, not exceeding three hundred
and sixty days from such arrival as the
Commissioner may allow; and
(e) a state officer.
PART V—TAX PROCEDURES
34. Section 3 of the Tax Procedures Act, 2015 is
amended in the definition of the words “prescribed form”
by deleting the expression “section 70” and substituting
therefor the expression “section 71”.
Amendment of
section 3 of No.
29 of 2015.
35. Section 12 of the Tax Procedures Act, 2015 is
amended in subsection (4) by deleting the words “the
application” appearing immediately after the expression
“subsection (3)”.
Amendment of
section 12 of No.
29 of 2015.
36. Section 16 of the Tax Procedures Act, 2015 is
amended by deleting subsection (3) and substituting
therefor the following new subsection—
(3) Where a taxpayer has more than one tax
representative, each tax representative shall be responsible
for the tax obligation for which the tax representative has
been appointed.
Amendment of
section 16 of Act
No. 29 of 2015.
37. The Tax Procedures Act, 2015 is amended by
repealing section 25 and replacing it with the following
new section—
Repeal and
replacement of
section 25 of No.
29 of 2015.
Extension of time to
submit tax return 25. (1) A person required to submit a
tax return under a tax law may apply in
writing to the Commissioner for an
extension of time to submit the return.
(2) An application under subsection (1)
shall be made at least—
(a) fifteen days before the due date
in the case of a monthly return;
or
(b) thirty days before the due date
in the case of an annual return.
2018 Finance !
179
No. 10
(3) The Commissioner may grant an
application under this section if satisfied that
there is reasonable cause and shall notify the
applicant accordingly at least five days
before the due date:
Provided that—
(a) where no notification is received
under this subsection, the
application shall be deemed to have
been granted;
(b) only one extension may be granted
to an applicant in respect of a tax
period.
(4) The grant of an extension under this
section shall not alter the date for payment
of any tax due (referred to as the “original
due date”) under the return as specified in
the tax law under which the return has been
made.
(5) The provision of section 83 relating
to penalties for late submission of returns
shall not apply where an extension to submit
a return has been granted under this section.
38. Section 31 of the Tax Procedures Act, 2015 is
amended by deleting subsection (3) and substituting
therefor the following new subsection—
(3) Where an amended self-assessment return
has been submitted under subsection (2), the
Commissioner may accept or reject the amended
self-assessment return and where he rejects, he
shall furnish the taxpayer with the reasons for
such rejection within thirty days of receiving the
application.
Amendment of
section 31 of No.
29 of 2015.
39. The Tax Procedures Act, 2015 is amended by
repealing section 37B and substituting therefor the
following new section—
Repeal and
replacement of
section 37B of Act
No. 29 of 2015
Commissioner to
refrain from assessing
tax for income earned
outside Kenya
37B. (1) Notwithstanding any other
provision of this Act, the Commissioner
shall refrain from assessing or recovering
taxes, penalties or interest in respect of any
!
Finance 2018
180
No. 10
year of income ending on or before the 31st
December, 2017, and from following up on
the sources of income under the amnesty
where —
(a) that income has been declared for
the year 2017 by a person earning
taxable income outside Kenya;
(b) the returns and accounts for the
year 2017 are submitted on or
before the 30th June, 2019; and
(c) the funds declared voluntarily have
been transferred back to Kenya.
(2) This section shall not apply in
respect of any tax where the person who
should have paid the tax —
(a) has been assessed in respect of the
tax or any matter relating to the tax;
or
(b) is under audit, investigation or is a
party to ongoing litigation in
respect of the undisclosed income
or any matter relating to the
undisclosed income.
(3) Where no funds have been
transferred within the period of the amnesty,
there shall be a five year period for
remittance but a penalty of ten percent shall
be levied on the remittance.
(4) The funds transferred under the
amnesty shall be exempt from the provisions
of Proceeds of Crime and Anti-Money
Laundering Act, 2009 or any other Act
relating to reporting and investigation of
financial transactions, to the extent of the
source of the funds excluding funds derived
from proceeds of terrorism, poaching and
drug trafficking.
40. Section 42 of the Tax Procedures Act, 2015 is
amended—
(a) in subsection (2), by deleting the word “payer” and
substituting therefor the words “an agent”;
Amendment of
section 42 of No.
29 of 2015.
2018 Finance !
181
No. 10
(b) in subsection (3), by deleting the word “payer”
wherever it occurs and substituting therefor the
words “an agent”;
(c) in subsection (5), by deleting the word “payer” and
substituting therefor the words “an agent”;
(d) in subsection (6)—
(i) by deleting the word “taxpayer” and
substituting therefor the words “an agent”; and
(ii) by deleting the word “payer” wherever it
occurs and substituting therefor the words “an
agent”;
(e) in subsection (7), by deleting the word “payer”
wherever it occurs and substituting therefor the
words “an agent”;
(f) in subsection (8), by deleting the word “payer” and
substituting therefor the words “an agent”;
(g) in subsection (9), by deleting the word “payer” and
substituting therefor the words “an agent”;
(h) in subsection (10), by deleting the word “payer”
wherever it occurs and substituting therefor the
words “an agent”; and
(i) in subsection (11), by deleting the word “payer”
and substituting therefor the words “an agent”.
41. Section 51 of the Tax Procedures Act, 2015 is
amended in subsection (3)—
(a) by inserting the words “or has applied for an
extension of time to pay the tax not in dispute
under section 33(1)” at the end of paragraph (b);
and
(b) by adding the following new paragraph
immediately after paragraph (b)–
(c) all the relevant documents relating to the objection
have been submitted.
Amendment of
section 51 of No.
29 of 2015.
42. Section 62 of the Tax Procedures Act, 2015 is
amended by deleting the expression “section 62” appearing
in subsection (1) and substituting therefor the expression
“section 63”.
Amendment of
section 62 of No.
29 of 2015.
!
Finance 2018
182
No. 10
43. Section 80 of the Tax Procedures Act, 2015 is
amended by deleting the expression “section 48” appearing
in subsection (3) and substituting therefor the expression
“section 47”.
Amendment of
section 80 of No.
29 of 2015.
44. Section 83 of the Tax Procedures Act, 2015 is
amended in subsection (1)—
(a) by deleting paragraph (c);
(b) by adding the following new paragraphs
immediately after paragraph (b)–
(c) five per cent of the amount of tax payable under
the return or ten thousand shillings, whichever is
the higher, if it is in relation to value added tax or
excise duty;
(d) in any other case—
(i) five per cent of the amount of tax payable
under the return or twenty thousand shillings,
whichever is the higher, in respect of a person
other than an individual; or
(ii) five per cent of the amount of tax payable
under the return or two thousand shillings,
whichever is the higher, for an individual.
Amendment of
section 83 of No.
29 of 2015.
45. The Tax Procedures Act, 2015 is amended by
inserting the following new section immediately after
section 83—
Insertion of
section 83A into
No. 29 of 2015.
Late payment
penalty. 83A. A person who fails to pay tax on
the due date shall be liable to pay a late
payment penalty of five percent of the tax
due and payable.
46. Section 89 of the Tax Procedures Act, 2015 is
amended—
(a) in subsection (2), by deleting the word “may”
appearing immediately after the word
“Commissioner” and substituting therefor the
word “shall”;
(b) by deleting subsection (7) and substituting therefor
the following new subsection—
(7) The Commissioner may, upon an
application under subsection (6) or on his own
motion, remit in whole or in part, any penalty or
Amendment of
section 89 of No.
29 of 2015.
2018 Finance !
183
No. 10
interest payable by a person, except a penalty
imposed under section 85, if satisfied that the
remission is by reason of—
(a) consideration of hardship or equity; or
(b) impossibility or undue difficulty or
expense, of recovery of the tax:
Provided that the Commissioner shall—
(i) where the amount of the penalty or
interest exceeds one million five
hundred thousand shillings, seek
prior approval of the Cabinet
Secretary; and
(ii) make quarterly reports to the Cabinet
Secretary on the remissions granted
under this section.
47. The Tax Procedures Act, 2015 is amended by
inserting the following new sections immediately after
section 103—
Insertion of
sections 103A and
103B in No. 29 of
2015.
Unauthorized access
or improper use of
computerized tax
system.
103A. (1) A person who—
(a) knowingly and without lawful
authority, by any means, gains
access to or attempts to gain access
to any computerized tax system;
(b) having lawful access to any
computerized tax system,
knowingly uses or discloses
information obtained from such
system for a purpose that is not
authorised; or
(c) knowing that he is not authorized to
do so, receives information
obtained from any computerized tax
system, and uses, discloses,
publishes, or otherwise
disseminates such information,
commits an offence.
(2) A person convicted of an offence
under subsection (1) shall be liable—
!
Finance 2018
184
No. 10
(a) in the case of a natural person, to
imprisonment for a term not
exceeding two years, or to a fine
not exceeding four hundred
thousand shillings, or to both; or
(b) in the case of a body corporate, to a
fine not exceeding one million
shillings.
Interference with
computerized tax
system.
103B. (1) A person who knowingly—
(a) falsifies any record or information
stored in any computerized tax
system;
(b) damages or impairs any
computerized tax system; or
(c) damages or impairs any duplicate
tape or disc or other medium on
which any information obtained
from a computerized tax system is
held or stored otherwise than with
the permission of the
Commissioner,
commits an offence.
(2) A person convicted of an offence
under subsection (1) shall be liable to
imprisonment for a term not exceeding three
years, or to a fine not exceeding eight
hundred thousand shillings, or to both.
48. Section 104 of the Tax Procedures Act, 2015 is
amended in subsection (2) by deleting the word “and” and
substituting therefor the word “or”.
Amendment of
section 104 of No.
29 of 2015.
PART VI—MISCELLANEOUS FEES AND LEVIES
49. Section 2 of the Miscellaneous Fees and Levies
Act, 2016 is amended—
(a) by deleting the word “or” and adding the words
“or special economic zone” at the end of the
definition of the word “export”; and
(b) by inserting the following new definition in proper
alphabetical sequence—
Amendment of
section 2 of No.
29 of 2016.
2018 Finance !
185
No. 10
“Special Economic Zone” has the meaning
assigned to it under the Special Economic Zones
Act, 2015.
50. The Miscellaneous, Fees and Levies Act, 2016 is
amended by inserting the following new section 8A
immediately after section 8-
Anti-adulteration levy. 8A. (1) There shall be paid a
levy to be known as the antiadulteration
levy, on all
illuminating kerosene imported
into the country for home use.
(2) The levy shall be at the rate
of eighteen shillings per litre of
the customs value of the
illuminating kerosene and shall
be paid by the importer at the
time of entering the illuminating
kerosene into the country.
Insertion of section
8A into No. 29 of
2016.
51. The Second Schedule to the Miscellaneous Fees
and Levies Act, 2016 is amended—
(a) in Part A, by adding the following new paragraph
immediately after paragraph (xxii)—
(xxiii) goods imported for implementation of
projects a under special operating
framework arrangement with the
Government.
(b) in Part B by adding the following new paragraph
immediately after paragraph (vi)—
(vii) goods imported for implementation of
projects under a special operating
framework arrangement with the
Government.
Amendment of
Second Schedule
to No. 29 of 2016.
PART VII—MISCELLANEOUS
52. The Betting, Lotteries and Gaming Act is amended
by inserting the following new section immediately after
section 5—
Insertion of
section 5A in Cap.
131.
Fit and proper criteria
for casinos. 5A. (1) The Board shall, in
determining whether an applicant is
!
Finance 2018
186
No. 10
suitable to hold a licence or permit under
this Act, consider—
(a) the financial status or solvency of
the person;
(b) the educational or other
qualifications or experience of the
applicant having regard to the
nature of the functions which, if the
application is granted, the person
shall perform;
(c) the status of any other licence or
approval granted to the applicant by
any financial sector regulator;
(d) the ability of the applicant to carry
on the regulated activity
competently, honestly and fairly;
and
(e) the reputation, character, financial
integrity and reliability—
(i) in the case of a natural person,
of that person; or
(ii) in the case of a company, of the
company, its chairperson,
directors, chief executive,
management and all other
personnel, including all duly
appointed agents, and any
substantial shareholder of the
company, if the chairperson,
director, chief executive,
management or the personnel
are shareholders of the
company.
(2) Without prejudice to the generality
of subsection (1), the Board may, in
considering whether an applicant is fit and
proper –
(a) take into account whether the
applicant —
(i) has contravened any law in
Kenya or elsewhere designed
2018 Finance !
187
No. 10
for the protection of members
of the public against financial
loss due to dishonesty,
incompetence or malpractice by
persons engaged in transacting
with marketable securities;
(ii) was a director of a licensed
person who has been liquidated
or is under liquidation or
statutory management;
(iii) has taken part in any business
practice which, in the opinion of
the Board, was fraudulent,
prejudicial to the market or
public interest, or was otherwise
improper, which would
otherwise discredit the
applicant’s methods of
conducting business;
(iv) has taken part or has been
associated with any business
practice which casts doubt on
the competence or soundness of
judgment of that applicant; or
(v) has acted in such a manner as to
cast doubt on the applicant’s
competence and soundness of
judgment;
(b) take into account any information
in the possession of the Board,
whether provided by the applicant
or not, relating to —
(i) any person who is to be
employed by, associated with,
or who shall be acting for or on
behalf of, the applicant for the
purposes of a regulated activity,
including an agent; and
(ii) where the applicant is a
company in a group of
companies, any other company
!
Finance 2018
188
No. 10
in the same group of companies,
or any substantial shareholder
or key personnel of the
company or any company
referred to under this
subparagraph;
(c) take into account whether the
applicant has established effective
internal control procedures and risk
management systems to ensure its
compliance with all applicable
regulatory requirements; and
(d) have regard to the state of affairs of
any other business which the
applicant carries on or purports to
carry on.
(3) The Board shall give the applicant
an opportunity to be heard before
determining whether the applicant is fit and
proper for the purposes of this Act.
(4) An applicant who knowingly makes
a false statement or declaration in an
application for, or a renewal or variation of,
a licence or permit commits an offence and
shall, upon conviction, be liable to a fine not
exceeding five thousand shillings or to
imprisonment for a term not exceeding six
months, or to both.
(5) For the purposes of this section,
“group of companies” means any two or
more companies, one of which is the holding
company of the others.
53. Section 29A of the Betting, Lotteries and Gaming
Act is amended in subsection (1) by deleting the expression
“thirty-five” and substituting therefor the expression
“fifteen”.
Amendment of
section 29 A of
Cap. 131.
54. Section 44A of the Betting, Lotteries and Gaming
Act is amended in subsection (1) by deleting the expression
“thirty-five” and substituting therefor the expression
“fifteen”
Amendment of
section 44A of Cap.
131.
2018 Finance !
189
No. 10
55. Section 55A of the Betting, Lotteries and Gaming
Act is amended in subsection (1) by deleting the expression
“thirty-five” and substituting therefor the expression
“fifteen”.
Amendment of
section 55A of Cap.
131.
56. Section 59B of the Betting, Lotteries and Gaming
Act is amended in subsection (1) by deleting the expression
“thirty-five” and substituting therefor the expression
“fifteen”.
Amendment of
section 59B of Cap.
131.
57. The Betting, Lotteries and Gaming Act is amended
by inserting the following new sections immediately after
section 69─
Insertion of new
section 69A and 69B
in Cap. 131.
Taxes to be paid into
fund. 69A. The Collector shall pay all the
proceeds of tax paid under sections 29A (2),
44A (2), 55A (2) and 59B (2) into the
Sports, Arts and Social Development Fund
established under section 24 of the Public
Finance Management Act, 2012.
Late payment penalty
and interest.
69B. (1) Subject to subsection (2), a
person who fails to pay a tax imposed under
sections 29A, 44A, 55A and 59B, on the due
date shall be liable—
(a) to a late payment penalty of five per
cent of the tax payable; and
(b) to a late payment interest at a rate
equal to one per cent per month or
part of a month on the amount
unpaid for the period until the tax is
paid in full.
(2) The late payment interest payable
under this section shall be computed as
simple interest.
(3) The late payment penalty or interest
shall be payable to the Collector and shall be
treated as a tax payable by the person liable
for the tax.
(4) The accrued late payment interest
shall not, in aggregate, exceed the principal
tax liability.
(5) A person liable to a late payment
penalty or interest may apply in writing to
!
Finance 2018
190
No. 10
the Collector for the remission of the penalty
or interest payable and such application shall
include the reasons for the application.
(6) The Collector may, upon an
application under subsection (5) or on his
own motion, remit in whole or in part, late
payment penalty or interest payable by a
person if satisfied that the remission is by
reason of—
(a) consideration of hardship or equity;
or
(b) impossibility or undue difficulty or
expense, of recovery of tax:
Provided that—
(i) where the amount of the
penalty or interest exceeds
one million five hundred
thousand shillings, the
collector shall seek prior
approval of the Cabinet
Secretary responsible for
finance; and
(ii) make quarterly reports to the
Cabinet Secretary responsible
for finance on the remissions
granted.
58. Section 2 of the Marine Insurance Act is amended
by inserting the following new definition in proper
alphabetical sequence—
“Commissioner” has the meaning assigned to it in
section 2 (1) of the Insurance Act.
Amendment of
section 2 of Cap.
390.
59. Section 16A of the Marine Insurance Act is
amended by deleting the words “this Act” appearing
immediately after the words “registered under” and
substituting therefor the words “the Insurance Act”.
Amendment of
section 16A of
Cap. 390.
60. Section 3 of the Air Passenger Service Charge Act
is amended in subsection (3) by deleting the words “Kenya
Airport Authority and the Kenya Civil Aviation Authority”
and substituting therefor the words “Kenya Airports
Authority, the Kenya Civil Aviation Authority and the
Tourism Promotion Fund.
Amendment of
section 3 of Cap.
475.
2018 Finance !
191
No. 10
61.The Stamp Duty Act is amended by inserting
the following new section immediately after section
82—
Payment of
stamp for
“policy of life
insurance”
and “policy of
insurance
against
accident”
82A. For purposes of this Act,
the stamp duty payable for “policy
of life insurance” and “policy of
insurance against accident” shall
be payable monthly as an
aggregate of all policies issued
within the month.
Insertion of new
section 82A in
Cap. 480.
62. Section 117 of the Stamp Duty Act is amended in
subsection 1 by adding the following new paragraphs
immediately after paragraph (l) –
(m) an instrument executed for purposes of collection
and recovery of tax,
(n) an instrument relating to the business activities of
special economic zone enterprises, developers
and operators licenced under the Special
Economic Zones Act, 2015.
Amendment to
section 117 of the
Cap. 480.
63. The Banking Act is amended by inserting the
following new section immediately after section 31—
Information on
next of kin. 31A. (1) A bank or financial
institution licensed under this Act shall, in
respect of all accounts operated at the
institution, maintain a register containing
particulars of the next of kin of all
customers operating such accounts, and
shall update this register on an annual
basis.
(2) A bank or financial institution
which contravenes subsection (1)
commits an offence and shall be liable,for
each account in which there is default, to
a fine not exceeding one million shillings.
Insertion of new
section 31A in
Cap. 480
64. Section 33B of the Banking Act is amended by
deleting subsection (1) and substituting therefor the
following new subsection─
(1) A bank or a financial institution shall set the
maximum interest rate chargeable for a credit facility
in Kenya at no more than four per cent, the Central
Amendment of
section 33B of Cap.
488.
!
Finance 2018
192
No. 10
Bank Rate set and published by the Central Bank of
Kenya.
65. The Banking Act is amended by inserting the
following new clause immediately after clause 33B—
Power of Central
Bank to prescribe
conditions on
deposits or
withdrawals.
33C. (1) The Central Bank shall
prescribe, in regulations, conditions on
deposits or withdrawals by customers in
banks and financial institution.
(2) The Central Bank shall within
thirty days of coming into force of this
Act, prescribe regulations setting out
conditions for deposits and withdrawals
by customers in banks and financial
institutions in accordance with the
Statutory Instruments Act.
(3) For avoidance of doubt no other
person shall purport to make regulations
required under this section and any
existing guidelines or regulations
prescribing conditions on deposits or
withdrawals by customers shall cease to
be operational within fourteen days of
the coming into force of the regulations
made under this section.
Insertion of new
section 33C in
Cap. 488.
66. Section 2 of the Central Bank of Kenya Act is
amended by inserting the following new definitions in
proper alphabetical sequence—
“mortgage refinance business” means the business
of providing long term financing to primary mortgage
lenders for housing finance and any other activity that
the Bank may from time to time prescribe;
“mortgage refinance company” means a nondeposit
taking company established under the
Companies Act, 2015 and licensed by the Bank to
conduct mortgage refinance business; and
“specified mortgage refinance company” means a
licensed mortgage refinance company within the
meaning of section 33P, which is specified by the
Bank for the purposes of the Act.
Amendment of
section 2 of Cap.
491.
2018 Finance !
193
No. 10
67. Section 4A of the Central Bank of Kenya Act is
amended in subsection (1) by adding the following new
paragraph immediately after paragraph (f)—
(g) license and supervise mortgage refinance
companies.
Amendment of
section 4A of Cap.
491.
68. The Central Bank of Kenya Act is amended by
inserting the following new Part immediately after Part
VIA—
Insertion of a new
Part VIB in Cap.
491.
PART VIB—MORTGAGE FINANCING
BUSINESS
Licensing. 33P. (1) A person shall not engage in
mortgage refinance business unless that
person has been licensed by the Bank.
(2) An application for a licence under
in subsection (1) shall be made to the Bank
in the prescribed form and accompanied by
the prescribed fee.
(3) A person who contravenes the
provision of subsection (1) commits an
offence.
Powers of the Bank. 33Q. (1) The Bank shall have the
following powers with respect to the
regulation of mortgage refinance
companies—
(a) to license mortgage refinance
companies;
(b) to determine the capital adequacy
standards and requirements for
mortgage refinance companies;
(c) to prescribe the minimum liquidity
requirements and permissible
investments for mortgage refinance
companies;
(d) to supervise mortgage refinance
companies, including –
(i) conducting both on-site and
off-site supervision;
(ii) assessing professional and
moral suitability of persons
!
Finance 2018
194
No. 10
managing or controlling the
mortgage refinance
companies;
(iii) approving the Board and
management of the mortgage
refinance companies;
(iv) approving the appointment of
the external auditors;
(v) collecting regular data from
mortgage refinance
companies;
(vi) approving the annual audited
accounts of mortgage
refinance companies before
publication and presentation at
the annual general meetings;
(e) to revoke or suspend a licence;
(f) to direct or require such changes as
the Bank may consider necessary;
and, and
(g) to take any other action as the Bank
may consider necessary.
69. Section 43 of the Central Bank of Kenya Act is
amended in subsection (1) by inserting the words “specified
mortgage refinance companies” immediately after the
words “specified microfinance banks”.
Amendment of
section 43 of
Cap.491.
70. Section 57 of the Central Bank of Kenya Act is
amended in subsection (1) by inserting the words “,issue
guidelines, circulars and directives” immediately after the
word “regulations”.
Amendment of
section 57 of Cap.
491.
71. The First Schedule to the Kenya Revenue
Authority Act, 1995 is amended in Part II by adding the
following new paragraph immediately after paragraph 13—
14. Public Finance Management Act, 2012.
Amendment of
First Schedule to
No. 2 of 1995.
72. Section 34 of the Retirement Benefits Act, 1997 is
amended by deleting subsection (4C) and inserting the
following new subsections–
(4C) A trustee who fails to submit a copy of
audited accounts of the scheme to the Chief Executive
Amendment of
section 34 of No.
2 of 1997.
2018 Finance !
195
No. 10
Officer by the due date shall pay a penalty of one
hundred thousand shillings and where the returns
remain un-submitted, the trustee, in addition to the
prescribed penalty, shall pay a further fine of one
thousand shillings for each day or part thereof during
which the returns remain unsubmitted:
Provided that a person who pays a penalty under
this subsection may also be liable to prosecution in
court under subsection (4A).
(4D) A fund manager who fails to submit an
investment return of a scheme to the Chief Executive
Officer by the due date shall pay a penalty of ten
thousand shillings and where the returns remain unsubmitted,
the fund manager, in addition to the
prescribed penalty shall pay a further fine of one
thousand shillings for every day or part thereof during
which the returns remain unsubmitted.
(4E) An administrator who fails to submit
contribution returns of a scheme to the Chief Executive
Officer by the due date shall pay a penalty of ten
thousand shillings and where the returns remain unsubmitted,
the administrator, in addition to the
prescribed penalty, shall pay a further fine of one
thousand shillings for every day or part thereof during
which the returns remain unsubmitted.
73. The Retirement Benefits Act, 1997 is amended by
inserting the following new section immediately after
section 53A—
Insertion of a new
section 53B in No.
2 of 1997
Powers to recover
unremitted
contributions.
53B. Notwithstanding the provisions
stated under section 53A, where there is
non-remittance of the contribution by the
employer, the Authority shall—
(a) require the employer to—
(i) pay the contributions and
interest accrued to the scheme
in full within the period
specified in the notice and a
penalty of five per cent of unremitted
contributions or
twenty thousand shillings
whichever is higher, payable to
the Authority within seven days
of receipt of the notice;
!
Finance 2018
196
No. 10
(ii) pay the penalty specified in
paragraph (a) (i) and submit to
the Authority for approval a
remedial plan providing the
period within which the
accumulated contributions and
interest thereon shall be offset;
or
(iii) immediately cease further
deductions from employees’
emoluments and notify all the
members of the scheme of the
cessation:
Provided that —
(A) the Authority may lift
the cessation order
where it is satisfied that
the employer is able to
remit the employee
emoluments as and
when they fall due;
(B) where there is a failure
by an employer to
comply with a direction
to cease deductions
from employees’
emoluments under this
provision, the Authority
shall take the necessary
action or issue such
other directions as it
may deem necessary
and expedient in
protecting the interests
of the members,
including instituting
summary proceedings
to recover the amounts
due to the scheme; and
(b) initiate the process of winding up
the scheme and facilitate members
to join individual schemes where
their contributions shall be
remitted.
2018 Finance !
197
No. 10
74. Section (2) (1) of the Accountants Act, 2008 is
amended—
(a) by deleting the definition of the word “accountant”
and substituting therefor the following new
definition─
“accountant” is a person registered as an
accountant under Section 24 of this Act and is a
member as defined in section 4 (2) (a) and (b) with
expertise achieved through formal education and
practical experience, and shall be held to a high
professional standard in respect to—
(a) demonstrating and maintaining competence
in accountancy in line with International
Accounting standards;
(b) compliance with the Institute’s code of ethics;
(c) maintaining good standing status; and
(d) subject to enforcement of the rules and
regulations of the Institute;
(b) by the deleting the definition of the word
“Minister” and substituting therefor the following
new definition—
“Minister” means the Cabinet Secretary
responsible for matters relating to finance; and
(c) by inserting the following new definition in proper
alphabetical sequence—
“company” has the meaning assigned to it
under section 2 of the Companies Act, 2015;
“accountancy” means practice in accounting,
financial reporting, control systems, systems
auditing, auditing, assurance, forensic
accounting and auditing, finance, financial
management, public finance management,
taxation, financial risk management,
management accounting and advisory services
related thereto; and
“trainee accountant” means a person
registered by the Examinations Board and who
has commenced professional accountancy
education or training or is practicing
Amendment of
No. 15 of 2008.
!
Finance 2018
198
No. 10
accountancy as part of initial professional
development required for qualification as an
accountant.
75. Section 5 of the Accountants Act, 2008 is amended
by—
(a) renumbering section 5 as section 5(1);
and
(b) inserting the following new subsection
immediately after subsection (1)—
(2) Despite subsection (1), a trainee
accountant, student or a person required
by the Institute to be registered as a
member prior to attaining the
qualifications under section 26 shall not
be required to pay any fees or
subscriptions.
Amendment of
section 5 of No.15
of 2008.
76. Section 8 of the Accountants Act,2008 is amended
by inserting the following new paragraph immediately after
paragraph (f)—
(fa) prescribe the remuneration order for the
accountancy profession with the approval of the
Cabinet Secretary responsible for finance.
Amendment of
section 8 of No.
15 of 2008.
77. Section 17 of the Accountants Act, 2008 is
amended by inserting the following new subsection
immediately after subsection (2)—
(2A) The Examinations Board shall, prior to
registering a person to undertake an examination in
accounting, require that the person be registered as a
member of the Institute.
Amendment of
section 17 of
No. 15 of 2008.
78. Section 18 of the Accountants Act, 2008 is
amended in subsection (2) by deleting the words “one
hundred thousand” and substituting therefor the words
“five hundred thousand”.
Amendment of
section 18 of
No. 15 of 2008.
79. Section 21 of the Accountants Act, 2008 is
amended in subsection (8) by deleting the words “five
thousand” and substituting therefor the words “five
hundred thousand”.
Amendment of
section 21 of
No. 15 of 2008.
80. Section 24 of the Accountants Act, 2008 is
amended in subsection (5) by deleting the words “fifty
thousand” and substituting therefor the words “five
hundred thousand”.
Amendment of
section 24 of
No. 15 of 2008.
2018 Finance !
199
No. 10
81. Section 30 of the Accountants Act, 2008 is
amended by inserting the following new subsections
immediately after subsection (2)—
(2A) An accountant shall observe the ethical
guidelines and applicable standards in the discharge
of duty.
(2B) The ethical guidelines and applicable
standards of the accountancy profession shall take
precedence over any instructions from a client or
other person.
(2C) An accountant shall not be liable for
taking such actions or decisions or rejecting
instructions from a client if such action, decision or
rejection is in pursuance of the provisions of
subsections (2A) and (2B).
Amendment of
section 30 of
No. 15 of 2008.
82. Section 41 of the Accounts Act, 2008 is amended
by deleting subsection (4) and substituting therefor the
following new subsection—
(4) A person who commits an offence under
this section is liable on conviction to a fine not
exceeding two million shillings, and, in the case of
a continuing offence, a further fine not exceeding
two thousand shillings for each day on which the
offence continues
Amendment of
section 41 of
No. 15 of 2008.
83. The Fifth Schedule to the Accountants Act, 2008
is amended in—
(a) paragraph (4) by deleting the words “one hundred
thousand” appearing in subparagraph (1)(d) and
substituting therefor the words “one million”; and
(b) paragraph (8) by deleting the words “twenty
thousand” appearing in subparagraph (3) and
substituting therefor the words “five hundred
thousand”.
Amendment of
Fifth Schedule
to No. 15 of
2008.
84. The Proceeds of Crime and Anti-Money
Laundering Act, 2009 is amended by inserting the
following new section immediately after section 45—
Insertion of
section 45A in
No. 9 of 2009.
Higher risk
countries.
45A. (1) A reporting institution shall
apply enhanced customer due diligence
on business relationships and transactions
with any natural and legal persons, legal
!
Finance 2018
200
No. 10
arrangements or financial institutions
originating from countries identified as
posing a higher risk of money laundering,
terrorism financing or proliferation by—
(a) the Financial Action Task Force
(FATF) as having strategic money
laundering and combating financing
of terrorism deficiencies, that have
not made sufficient progress in
addressing the said deficiencies or
have not committed to an action
plan to address the deficiencies; or
(b) the Cabinet Secretary as having
ongoing substantial money
laundering and terrorism financing
risks.
(2) In addition to enhanced customer
due diligence measures, a reporting
institution shall apply appropriate
countermeasures, proportionate to the
risk presented by countries subject to a
Financial Action Taskforce (FATF)
public statement or as advised by the
Cabinet Secretary.
(3) In order to protect the financial
system from the ongoing and substantial
money laundering or terrorism financing
risks emanating from the jurisdictions
referred to under subsection (2), a
reporting institution shall apply
countermeasures including—
(a) limiting or terminating business
relationships or financial
transactions with natural and legal
persons, legal arrangements, or
financial institutions located in the
concerned countries;
(b) prohibiting reliance on third parties
located in the concerned countries
to conduct customer due diligence;
(c) applying enhanced due diligence
measures on correspondent banking
2018 Finance !
201
No. 10
relationships with financial
institutions located in the concerned
countries;
(d) when considering the establishment
of subsidiaries or branches or
representative offices of financial
institutions from the concerned
countries, take into account whether
the financial institution is based in
countries identified as having
higher money laundering or
terrorism financing risks or
inadequate money laundering or
terrorism financing systems;
(e) submit a report listing customers,
both natural and legal persons, and
legal arrangements, originating
from the higher risk countries to the
Financial Reporting Centre on an
annual basis; and
(f) any other measures as may be
specified by the Financial
Reporting Centre.
85. The Employment Act, 2007 is amended in section
2 by inserting the following new definitions in the proper
alphabetical sequence-
“employer contribution” means the employer’s
contribution payable into the National Housing
Development Fund;
“employee contribution” means a contribution payable
under this Act for his or her benefit;
“employee earnings” means the taxable amount
determined under the Income Tax Act for purposes of
levying income tax on the employee emoluments.
“National Housing Development Fund” means to the
Fund established under section 6 of the Housing Act.
Insertion of
section 45A in
No. 9 of 2009.
86.The Employment Act, 2007 is amended by
inserting the following new section immediately after
section 31-
Insertion of new
section 31A into
No. 11of 2007
!
Finance 2018
202
No. 10
Payment to the
National Housing
Development
Fund.
31A. (1) An employer shall pay to
the National Housing Development Fund
in respect of each employee—
(a) the employer’s contribution at one
point five per centum of the
employee’s monthly basic salary;
and
(b) the employee’s contribution at one
point five per centum of the
monthly basic employee’s salary:
Provided that the sum of the employer and
employee contributions shall not exceed
five thousand shillings a month.
(2) The benefits to an employee shall
accrue as follows –
(a) for employees who qualify for
affordable housing, the
contributions accrue to the
employee and shall be used to
finance the purchase of a home
under the affordable housing
scheme; or
(b) for employees who are not eligible
for affordable housing, upon the
expiry of fifteen years from the
date of the start of making the
contributions, or after the
attainment of retirement age,
whichever is sooner─
(i) a transfer of their
contributions to a pension
scheme registered with the
Retirement Benefits
Authority;
(ii) a transfer their contributions
to any person registered and
eligible for affordable housing
under the National Housing
Development Fund; or
(iii) a transfer of their
contributions to their spouse
or dependent children; or
2018 Finance !
203
No. 10
(iv) to receive their contributions
in cash:
Provided that contributions paid out in
cash shall be included in the contributor’s
taxable income for the year and be
subjected to tax at the prevailing rates.
(3) All contributions shall get a
return based on the return on the Fund.
(4) The employer shall remit both
employee and employer contributions to
the National Housing Development Fund
before the ninth day of the following
month.
(5) If the contributions due under
this section are not paid on or before the
day on which the payments are due, a
penalty of five percent of the
contributions shall be payable by the
employer for each month or part thereof
during which the contributions remains
unpaid, and any such penalties shall be
recoverable as a sum due and payable to
the National Housing Development Fund.
(6) This section shall become
effective upon the gazettement of
regulations prescribing the requirements
for qualification to the scheme by the
Cabinet Secretary responsible for housing
in consultation with the Cabinet Secretary
responsible for finance.
