Explainer:What it means when finance act is suspended

The notion that government business will come to a standstill because of the suspension of the finance act 2023, is totally misplaced. The annual finance act amends existing taxation laws, usually to increase or change in some other way existing taxes.

What is affected therefore is the incremental taxation for that year. The existing or original tax laws such as the VAT Act, Income Tax Act, External Common Tariff, Miscellaneous Fees and Levies Act, all remain in place.

Until the case is determined, KRA will continue to collect taxes at the same level as they were last month!

Services should also not suffer, because government does not spend, nor does it raise the money in one go, on day one of the finance year. Rather expenditures continue throughout the year. In a similar manner, taxes are collected every day.

The Court of Appeal on Thursday declined to lift High Court’s order to suspend Finance Act 2023.

The court directed parties to appear for a ruling on July 28, where court will determine whether conservatory orders suspending the implementation of the Finance Act will be lifted, as sought by Treasury CS Prof Njuguna Ndung’u.

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