Charities and Kenya's Tax system: A proposal for tax law reforms
View/ Open
Date
2012Author
Gitau, Joseph J M
Type
ThesisLanguage
en_USMetadata
Show full item recordAbstract
Kenya has a particularly rich and diverse range of acts of philanthropy (giving) and charities without appropriate policies and legal framework to nature and supports the charity 'sector. The contemporary legislative framework fails to provide a definition of 'charity' fails to identify where responsibility lies for determining charitable status, fails also to specify whether the test to be applied to determine such status and registration or regulatory regimes respect of charities is inadequate. There is also multiplicity of agencies and lack of any co-ordination of their respective areas of responsibility in relation to charities
In nutshell, there is unsuitability of the current legal structures/forms for the modern charitable activity and cannot encourage philanthropic activities. This study will focus to fill an existing gap in the current tax law as it relates to charity sector. It is generally accepted that socio-economic changes in Kenya and global forces has now made changes to the related legislative framework an inescapable and pressing necessity. Legislative changes are broadly needed to provide a facilitative and sustainable environment for charities and to put in place registration and regulatory systems.
The range of existing connected legislation, such as the Companies Act, Societies Act, Value Added Tax Act, Income Tax Act, Non-Governmental Organization Co-ordination Act and Customs and Excise Act have impacts upon NGOs on and other charities but do not suitably recognize them and encourage charitable purposes. All will need to be revised and shaped into a more unified and coherent body of law. Any such overhaul of the law relating to charities would also need to address the legal structures that house their activities.
A clearer legislative articulation of the public benefit principle as it applies to contemporary social circumstances in Kenya may well be necessary to underpin and give coherence to the final reformulation of the law. The emphasis is on providing recognition for the charitable activities of the organizations in order to facilitate their eligibility for tax exemption and thereby encourage the continuance of such activities.
Publisher
University of Nairobi, Kenya