The Institute of Certified Public Accountants of Kenya (ICPAK) and consultancy firm Deloitte have appealed to Parliament to amend existing tax laws to ensure that taxes and levies are deducted before subjecting an employee's pay to Pay as You Earn (PAYE).

The organizations are proposing the introduction of a maximum tax band to prevent over-taxation on personal income.

During their appearance before the Finance and National Planning Committee in the National Assembly, the accounting firms argued that the highest rate of PAYE should not surpass that of the corporation tax.

Fred Omondi, a partner and legal leader at Deloitte, emphasized the disparity, stating, "Companies are allowed deductions, and only profits are taxed at 30 per cent. But for those who earn salaries, they pay more in PAYE than corporation tax."

Omondi also expressed his awareness of the Treasury's intentions to lower corporation tax to between 25 and 28 per cent.

"I am aware the Treasury intends to lower corporation tax to between 25 and 28 per cent, but PAYE is set at 32 per cent and 35 per cent for those earning more than Sh800,000. The highest rate of PAYE shouldn't exceed the corporation rate."

ICPAK, along with consulting firms Deloitte, Westminster Consulting, and the Institute of Economic Affairs (IEA), presented their concerns to the National Assembly's Finance Committee.

The committee, chaired by Molo MP Kuria Kimani, is currently soliciting input on the proposed National Tax Policy.

Kenya is in the process of enacting a national tax policy aimed at providing a framework for taxation that ensures tax predictability.

This policy seeks to expand the tax base, enhance fairness and equity in the tax system, and align with international best practices.

"We are hoping that these few days of rigorous engagement with the stakeholders [we] will come up with a document that will guide our tax policy so that the next Finance Bill will be based on a policy that has been agreed," Kimani stated.

The accountants expressed their reservations about the proposed tax policy, asserting that it disproportionately favours certain sectors while placing a heavier burden on low-income earners.

As discussions on the National Tax Policy continue, the accounting and consulting firms are pushing for revisions that would bring greater equity and transparency to the taxation system, ultimately benefiting all Kenyan taxpayers.