• June 18, 2024
  • Last Update June 18, 2024 2:12 PM
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PKF says status of the economy in the country to remain resilient

PKF says status of the economy in the country to remain resilient

Nairobi,

Monday June 10, 2024

KNA by Sharon Atieno/Judy Totari

Pannell Kerr Foster (PKF), a leading firm in Eastern Africa to accountants and business advisers has observed that Kenya’s economy is projected to remain resilient in 2024 and will be mainly supported by a robust service in the agriculture sector.

PKF Chief Executive Officer Alpesh Vadher said the resilience will be as result of strong performance in agriculture aided by anticipated adequate rainfall and a decline in global commodity prices which is expected to reduce the cost of production.

He noted that the country has done well in the hospitality industry and is highly ranked in terms of conferences and tourism adding that the private sector is the rock of the Kenyan economy.

The CEO was speaking at a media briefing on pre-budget ahead of the Kenya National Budget of the year 2024/2025 to address the implications of tax measures and state of the economy held at a Nairobi hotel.

Vadher noted that the economic performance had gone down in the last couple of years when the country had a turbulence in Kenya’s exchange rates due to global inflation which affected businesses.

He said Kenya’s public debt was Sh11.1 trillion in 2023, and is expected to reduce to Sh10.4 Trillion by the end of 2024, adding that the reduction in public debt is mainly attributed to exchange rate fluctuations.

The CEO acknowledged that by 2050 Africa’s population will be expected to be at 2.5 billion which is about 25percent of the global population and hence the need for the country to have the right policies and procedures.

Vadher said that the infrastructure bond which was issued by the Central Bank of Kenya was oversubscribed by 411 percent attracting coupon of the successful bids to the interest of 18.4percent making local investors to switch their investments to infrastructure bonds hence increasing the supply of foreign currency in the market.

“Technology advancement such as Electronic Tax Invoice Management System (ETIMS) and data management by the Kenya Revenue Authority will enable the government to increase tax collections and visibility of taxpayers’ details,” he stated.

He said that proposed Amendment by Finance Bill, 2024 to enable KRA request tax payers to integrate tax system with KRA’s data management and reporting system is a demonstration of technological advancement and urged the government to roll out public participation before rolling out a new technology to educate the public about it.

Vadher said that the government is working on the national tax policy since the policy guideline provides predictability and transparency of tax policies which is important to investors when making investment decisions.

“The policy also provides guidelines to the tax systems and administration reforms as it is intended to improve the predictability of tax rate,” he said.

PKF calls upon the government to implement the National Tax Policy with the Finance Bill, 2024 and ensure the proposed amendments that are repugnant are aligned with National Tax Policy citing provisions such as reduction in the time period of claiming realized foreign exchange losses from five years to three years.

The firm also called on the government to drop certain proposed Value Added Tax (VAT) changes singling out bread which is a basic food item in households and agricultural pest control products saying that increase of prices on agricultural products will expensive for Kenyans.

According to PKF, the proposal in Finance Bill, 2024 will bring positive impact of non-taxable benefits to employers, increase the limit of tax deductible contribution to pension schemes, tax deductibility of contribution to Adequate Health Literacy and Social Health Insurance Fund, increase the VAT registration threshold and reduce the rate of export and investment promotion levy among others.

PKF specializes in advising the management on developing private and public businesses.

Courtesy; KNA

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