The FA, 2023, was assented to law on 26 June 2023 eliciting 11 consolidated constitutional petitions filed at the HC’s Constitutional and Human Rights Division in Nairobi.

The 11 Petitions sought to have the FA, 2023 declared unconstitutional arguing broadly among other grounds, that for FA, 2023 to be passed it required the concurrence of the Senate and involvement of the public regarding the amendments passed on the floor of ‘the House’.

Further, the Petitioners at the HC argued that the proper legislative process including public participation was not followed while enacting the FA, 2023. At the center of the petitions was the issue of whether the Affordable Housing Levy (AHL) was constitutionally introduced through the FA, 2023.

The government has appealed the decision rendered by the Court of Appeal at the Supreme Court. However, the Supreme Court has declined the government’s prayers for the judgement of the lower court to be set aside pending the determination of the appeal. This essentially means, that the Court of Appeal Decision on FA, 2023 currently still stands until the appeal is heard and determined by the Supreme Court.

Understanding the Court’s Decision

The Court of Appeal found that the process leading to the enactment of the Finance Act 2023 was fundamentally flawed, violating the Constitution in several ways:

Lack of Public Participation: Crucial amendments were introduced without proper public consultation, undermining the principles of transparency and accountability.

Bypassing the Senate: The Act included non-money bill provisions that required Senate involvement, which was bypassed.

Disregarding Budgetary Procedures: The Act’s introduction and passage did not adhere to the established budget-making process outlined in the Constitution and the Public Finance Management Act.

Immediate Impacts for Taxpayers

According to a tax advisory published by professional services consulting firm, PwC Kenya, the court’s decision triggers a return to the pre-Finance Act 2023 tax regime (Finance Act 2022).

“In the intervening period, in absence of a stay of execution, the Judgment of the CoA has the full force of law and accordingly, the the government has to revert to the pre-FA 2023 for revenue collection.”

-The advisory published by PwC Kenya Tax experts, led by Job Kabochi, Partner in charge of Indirect Taxes.

Here’s what this means for you:

VAT Reversals: The VAT on petroleum products and LPG reverts to 8% from 16%. Exported taxable services are now subject to 16% VAT, except for Business Process Outsourcing (BPO) services.

PAYE Adjustments: PAYE tax bands revert to the 2022/2023 fiscal year rates, with the highest rate being 30%.

Withholding Tax Timelines: Payment deadlines for withholding tax and VAT revert to the 20th day of the following month.

E-TIMS Regulations: Challenges faced in complying with the e-TIMS regulations introduced by the Finance Act 2023 are now moot.

Excise Duty Changes: The repeal of the annual inflation adjustment for excise duty is reversed.

Affordable Housing Levy (AHL): It’s important to note that the AHL remains applicable and payable under the separate Affordable Housing Levy Act, 2024.

While the Court of Appeal’s decision brings clarity to the current tax landscape, the journey is far from over. The government has appealed the ruling to the Supreme Court, and the outcome of this appeal will ultimately determine the fate of the Finance Act 2023.

The post Kenyan Finance Act 2023 Declared Unconstitutional: What Now? appeared first on Biz Post Daily.

Strategic corporate communication is described as an expressive form of communication that seeks to establish, represent, and express a company’s identity.

Through strategic corporate communication, stakeholders are informed and aware of a company’s reputation promise. Therefore, strategic corporate communication ensures that organisations present and express themselves in a manner consistent with their reputation promise.

It ensures that organisations are trustworthy and earn the trust of stakeholders. Strategic corporate communication plays a significant role in managing a company’s corporate reputation and identity in a sustainability context.

It ensures that companies communicate in alignment with their reputation promise to earn the trust and support of stakeholders in the long term. It is a communication approach that is not short-term driven but focused on the long-term existence of an entity.

A company’s corporate identity rests on how aligned the company’s promise, behaviour and image are, as noted by Dr Adri Van der Merwe of the University of Pretoria. These three elements of corporate identity would play an important role in a company’s ESG strategy formulation and reporting.

ESG are the set of environmental, social and governance standards used by stakeholders in evaluating a company’s operation to assess its ability to create value sustainably.

It encompasses the risks and opportunities posed to businesses by climate change, resource scarcity, diversity and inclusion, data security, tax transparency, labour practices, social frameworks and more.

In recent years, it has become a hot topic, with investors scrutinizing the ESG strategies of companies.

The PwC 2021 Annual Corporate Directors Survey points to the momentum ESG is gaining in the boardroom, with half of all board meetings having ESG as an agenda item.

The UN climate change conference, COP 26 held last year in Glasgow and the race to NetZero will also require companies to consider the impact of global and national targets set to reduce emissions.

These climate goals will require companies to adopt and invest in new business models and technology to embrace the changing landscape. It also requires businesses to balance the need to reward shareholders in the short term while ensuring that adequate investments are made today for the future.

Having set an ESG strategy with metrics to monitor progress on strategic pillars, companies need to tell an authentic and coherent story. ESG reporting should be viewed as a strategic corporate communication tool that expresses the company’s identity and builds trust with stakeholders.

Investors are eager to understand the long-term impact of their investments and a well-communicated ESG strategy will help achieve this goal.

Having a good understanding of the various ESG standards is an important step for reporting. There are various ESG standards, such as the SASB (Sustainability Accounting Standards Board) and the TCFD (Task Force on Climate-Related Financial Disclosures).

Once understood, companies can leverage the various ESG standards to provide a compelling story that enhances their reputation. The metrics and KPIs reported on also have to be carefully selected to ensure they are aligned to the delivery of long-term value creation by the company so stakeholders can trust them.

The role of data and the use of technology cannot be over-emphasized when it comes to ESG reporting. Data enables companies to gain insights into their business, markets, products, customer engagement and more.

These insights result in a more efficient allocation of capital, influences the sort of information provided to stakeholders and the measurement of KPIs. In addition, employing technology improves efficiency and provides flexibility with the presentation of data.

Through ESG reporting, companies can report on their promise, behaviour and image to enhance their reputation with stakeholders.

This article was first published by BUSINESS DAILY on 07/02/2022.

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