Farmers, small traders faced with upfront tax in compliance drive


Farmers, small traders faced with upfront tax in compliance drive


Traders selling Second-hand clothes popularly known as Mitumba at Gikomba Market. FILE PHOTO | DENNIS ONSONGO | NMG

The Treasury is eyeing a creditable withholding tax on all imports at a minimal rate of the value as it targets to rope in more farmers and informal traders into the tax net.

It says players in these sectors remain highly invisible to the taxman.

“This will be treated as an advance tax by importers and is meant to enhance their visibility and boost revenue collection. This measure will also help discourage tax evasion and filing of nil returns,” it said.

Read: KRA will allow used car importers to defer taxes

Under the creditable withholding tax system, taxes withheld on certain income payments are advance tax payments that are offset against a final tax liability in an assessment for a particular year of income.

The payee may be required to file an income tax return to report the income and or pay the difference between the tax withheld and what is due on the income.

The Treasury said the GDP contribution by the agriculture sector remained less than three percent which was an indication of under-taxation.

Read: How September taxes will hit firms, consumers

“To address these challenges, the government will introduce a final withholding agricultural produce tax at a rate not more than five percent of the value of the produce delivered to the co-operatives and other organised groups,” it said.

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