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Finance Act, No. 4

SPECIAL ISSUE

Kenya Gazette Supplement No. 35 (Acts No. 4)

REPUBLIC OF KENYA
KENYA GAZETTE SUPPLEMENT

ACTS, 2012

NAIROBI, 2nd May, 2012

CONTENT

Act—
PAGE
The Finance Act, 2012

147

PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTER, NAIROBI

147

THE FINANCE ACT

No. 4 of 2012
Date of Assent: 27th April, 2012

Date of Commencement: See Section 1

An Act of Parliament to amend the law relating to various

taxes and duties and for matters incidental thereto

ENACTED
by the Parliament of Kenya, as follows

1

PART I

PRELIMINARY

1.
This Act may be cited as the Finance Act, 2012, and

shall come into operation, or be deemed to have come into •

operation, as follows –

(a) section 23, on the 1
St
January, 2006;

sections 6, 10, 11, 12(a), 13, 16(a)(i), 16(a)(ii)

18, 19, 20, 21 and 22(a)(i), on the 9
u
‘ June, 2011;

sections 3, 4, 5, 9, 14, 17, 22(b), 25, 27, 28, 29,

30, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43,
44, 49, 52, 53, 54, 55, 56, 57, 58, 59, 60 and 61,

on the 1
st
January, 2012;

(d)
sections 2, 7, 8, 24, 26, 31, 45, 46. 47.
48,
50 and

51, on the 2
nd
May, 2012;

(e)
sections 12(b), 15, 16(a)(iii), 16(b) and 22(a)(ii),

on such date as the Minister may, by notice in

the Gazette, appoint.

(b)

(c)

Short title and

commencement

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PART II — CUSTOMS AND EXCISE

Amendment of

section 95 of

Cap.472.

Amendment of

section 119 of

Cap.472..
2.

Section 95 of the Customs and Excise Act is

amended —

(a)
in subsection (5)(a) by inserting the words “or

such further period, not exceeding six months, as

the Commissioner may, on the application of a

licensee, permit in respect of that licence” and

(b)
by inserting the following new Subsection after

subsection (5) —

“(6) The Commissioner shall ensure that a

metering device prescribed under

subsection (4) does not compromise the
safety of the goods or materials that are

manufactured by a licensee or the health

of the consumers of such goods or

materials”.

3.
Section 119 of the Customs and Excise Act is

amended by inserting the following new subsection

immediately after subsection (6) —

(7) Notwithstanding the provisions of subsection (1)

and (1A), the Minister may, by notice in the Gazette,
adjust the specific rate of excise duty to take account

of inflation.

Amendment of

the Fifth

Schedule to
Cap.472.
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Amendment
of
section 127C of

Cap.472.

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Finance

4.
Section 127C of the Customs and Excise Act is

amended in subsection (2) by adding the words “except in the

case of beer and wine, where the value shall be the retail

selling price as determined in accordance with the

regulations” immediately after the words “ex-factory selling

price”.

5.
Section 139 of the Customs and Excise Act is

amended in subsection
(1)
by inserting the following new

paragraph immediately after paragraph (h) —

“(i) that in the case of water, remission shall be

granted to such extent as the Minister may, by notice

in the Gazette, specify.”

6.
The Fifth Schedule to the Customs and Excise Act is

amended –

(a)
in the manner specified in Part I of the First

Schedule to this Act;

(b)
in the manner specified in Part II of the First

Schedule to this Act;

(c)
in the manner specified in Part III of the First

Schedule to this Act.

PART III

VALUE ADDED TAX

7.
The Seventh Schedule to the Value Added Tax Act is

amended in paragraph 6(5) by deleting the word “an”

appearing after the words “any person to use” and

substituting therefor the words “a General Packet Radio

Service (GPRS) enabled.”

Amendment of

section 139 of

Cap.472.

Amendment of

the Seventh

Schedule to
Cap.476.

No. 4

Amendment of

Eighth Schedule

to Cap 476.

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8.
The Eighth Schedule to the Value Added Tax Act is

amended in Part A in the manner specified in the Second

Schedule to this Act.

PART IV

INCOME TAX

Amendment of

section 2 of

Cap.470.

9.
Section 2 of the Income Tax Act is amended by

inserting the following new definition in proper alphabetical

sequence-

“real estate investment trust” shall have the

Cap.
485A
meaning assigned to it in the Capital Markets Act;

“winnings” shall have the meaning assigned to it

Cap. 131

in the Betting, Lotteries and Gaming Act.

10.
Section 4 of the Income Tax Act is amended in

paragraph (c) by deleting the expression “respect of’.

11.
Section 5 of the Income Tax Act is amended in

subsection (4) —

(a)
by inserting the words “or his beneficiaries”

immediately after the words “full time employee”

wherever they occurs in paragraph (b);

(b)
by deleting paragraph (h) and substituting

therefor the following new paragraph —
(h) For the purposes of this subsection —

Amendment of

section
.
4 of

Cap 470.

Amendment of

section 5 of

Cap.470.

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(0
“beneficiaries” means the full time

employee’s spouse and not more

than four children whose age shall

not exceed twenty-one years; and

(ii) “low income employee” means an

employee whose taxable income is

not subject to tax at the rate of more

than twenty per cent under Head B

of the Third Schedule to this Act.

12.
Section 10 of the Income Tax Act is amended —

(a)
in paragraph (c), by inserting the words

“and deemed interest” immediately after the

word “interest”;

(b)
by inserting the following new paragraph

immediately after paragraph (f) —

(g) winnings from betting and

gaming.

13.
Section 16 of the Income Tax Act is amended by

inserting the following new subsection immediately after

subsection (4)-

(5) The Commissioner shall prescribe the form and

manner in which the deemed interest shall be

computed and the period for which it shall
be

applicable.

Amendment to

section 10 of

Cap.470.

Amendment of
section 16 of

Cap.470.

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Amendment of

section 20 of

Cap .470.

14. Section 20 of the Income Tax Act is amended by

inserting the following paragraph immediately after

paragraph (b) —

“(c) a real estate investment trust”

Amendment to

section 34 of

Cap.470.

Amendment of

section 35 of

Cap.470.

15.
Section 34(2) of the Income Tax Act is amended by

inserting the following new paragraph immediately after

paragraph (h) —

(i) winnings from betting and gaming.

16.
Section 35 of the Income Tax Act is amended —

(a) in subsection (1) —
(i)
by deleting the words “aircraft or aircraft

engines” appearing in paragraph (c) and

substituting therefor the words “aircraft,

aircraft engines, locomotives or rolling

stock”;

(ii)
by inserting the words “and deemed

interest” immediately after the word

“interest” wherever it occurs in paragraph

(e).

(iii)
by inserting the following new paragraph

immediately after paragraph (i) —

(j) winnings from betting and gaming;

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(b) in subsection (3), by inserting the following new

paragraph immediately after paragraph (h) —

(i) winnings from betting and gaming.

17.
The Income Tax Act is amended by inserting a new

section immediately after section 41 as follows –

Insertion of
section 41A in of

Cap.470.

Agreements for exchange of
information.

41A. The Minister may, by notice in the

Gazette, from time to time declare that

arrangements specified in the notice, being

arrangements made with the government of

any country with the view of exchanging

information relating to income tax or other

taxes of a similar character imposed by the

laws of that country, shall, notwithstanding

anything to the contrary in this Act or any

other written law, have effect in relation to

income tax, and that notice shall, subject to the

provisions of this section, have effect

accordingly.

18.
The

inserting the

section 52-

Returns, records,
etc. to be in

official

languages.

Income Tax Act is amended in Part VIII, by

following new section immediately before

51A.(1) For the purposes of this Act —

(a) any return, record or other document

required to be kept or produced shall

be in either of the official languages;

Insertion of new

section 5IA in

Cap.470.

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(b) the unit of currency in any such

return, record or other document

shall be the Kenya shilling.

(2) In subsection (1)(a), the expression

“official languages” shall have the meaning

assigned to it in Article 7 of the Constitution.

Amendment of

section 52B of

Cap.470.

19. Section 52B of the Income Tax Act is amended by

deleting the proviso to subsection (1) and replacing it with

the following new proviso —

“Provided that an employee who is employed by or

renders service to one employer shall not be required

to give a return under paragraph (a) —

(i)
if the employee had no income chargeable to

tax for that year of income other than

emoluments, and

(ii) the tax payable in respect of those emoluments
had been recovered by deduction under section

37.”

Amendment of

section 72C of

Cap.470.

Amendment of

section 132 of

Cap.470.

20.
Section 72C of the Income Tax Act is amended in

subsection (2), by deleting the words “five hundred thousand

shillings” appearing in paragraphs (a) and (b) of the proviso

and substituting therefor the words “one million five hundred

thousand shillings”.

21.
Section 132 of the Income Tax Act is amended by

adding the following new subsection immediately after

subsection (7) –

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(8) Without prejudice to any penalty that may be
imposed under subsection (7), the Commissioner

may, forthwith, register and issue a personal

identification number to a person who fails to obtain
such number as required by the Commissioner under

subsection (2).

Amendment of

the Third

Schedule of

Cap.470.

22. The Third Schedule to the Income Tax Act is

amended —

(a) in paragraph 3 —

(i)
by inserting the words “and deemed

interest” immediately after the words “and

interest” appearing in subparagraph (e) (i);

(ii)
by inserting the following new

subparagraph

immediately

after

subparagraph (1) —

(m) in respect of winnings from

betting and gaming, twenty percent.

(b) in paragraph 5, by inserting the following new

subparagraph immediately after subparagraph

(i) —

(j) in respect of winnings from betting

and garnjr:: twenty percent:

Provided that the tax so deducted shall

be final.

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PART V — MISCELLANEOUS

23. Part I of the First Schedule to the National

Assembly (Remuneration) Act is amended in the third
column under the title “Parliamentary Responsibilities

Allowance” –

Amendment of

First Schedule.

Amendment of

Second Schedule

of Cap. 5.
(a)
by inserting the figure “2,400,000.00” against

the entries “Deputy Speaker” and “Member of

the Chairman’s Panel respectively; and

(b)
by inserting the “1,200,000.00” against the entry

“Parliamentary Service Commissioner”.

24.

The Second Schedule to the National Assembly

Remuneration Act is amended in item 5 by deleting the

words “A severance allowance at the rate of Ksh.300,000 for

every year in service” appearing in the second column and

substituting therefor the words “A severance allowance at the

rate of thirty-one per centum of the salary specified in the

second column of the First Schedule for every year in

service”.

25. Section 25 of the National Social Security Fund Act

is amended by deleting paragraph (e).

26. Section 16 of the Rating Act is amended —

(a) in subsection (3) by inserting the word “simple”

after the words “The rating authority shall

charge”: and

Amendment of
section 25 of

Cap 258.

Amendment of
Section 16 of

Cap.267

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(b) by inserting the following new sub-section after

sub-section (3) —

“(4) Notwithstanding sub-section (3), the

interest charged shall not exceed the

principal amount of the rate owing.”

27.
Section 2 of the Traffic Act is amended by

inserting the following new definitions in proper alphabetical

sequence-

“registration certificate” means a

certificate issued under section 6(5);

“deregistration certificate” means a

deregistration certificate issued under section

6A(2);

“information technology” means any

equipment or software for use in storing,

retrieving, processing or disseminating

information;

“computerized motor vehicle registration

system” means any software or hardware for

use in storing, retrieving, processing or

disseminating information relating to

registration records of motor vehicles and

trailers, the licensing of drivers, and the

keeping of such records in relation thereto as

are required by this Act.

28.
The Traffic Act is amended by inserting new

sections immediately after section 5 as follows-

Amendment to
section 2 of Cap

403.

Insertion of

sections 5A, 5B,
5C, 5D, and 5E

in Cap 403.

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Use of

information

technology.

SA. (1) Subject to such conditions as the

Registrar may prescribe, registration,

licensing or any formalities and procedures

under this Act may be carried out by use of

information technology.

(2) For the purposes of subsection (1),

the Registrar may, by notice in the Gazette,

specify —

(a) the procedures which may be

carried out by use of information

technology; and

Application to
use of . computerized
motor vehicle registration
system.

(b) the persons authorized to carry out

such formalities using

information technology.

5E41) A person who wishes to be

registered as a user of a computerized motor

vehicle registration system may apply in

writing to the Registrar who may-

(a)
grant the application subject to such

conditions as he may impose; or

(b) reject the application.

(2) A person shall not access, transmit to,

or receive information from, a computerized

motor vehicle registration system unless that

person is a registered user of the system.

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Cancellation of
registration of
registered user.

5C. The Registrar may, at any time, cancel

the registration of a registered user of a

computerized motor vehicle registration

system if satisfied that the user has —

(a)
failed to comply with a condition of

registration imposed by the Registrar

under section 3;

(b)
failed to comply with, or has acted in

contravention of, any condition under
the rules; or

(c)
been convicted of an offence under

this Act relating to improper access to,

or interference with a motor vehicle

computerized’ system.

5D. (1)
Kperson commits an offence if

the person –

(a)
knowingly and without lawful

authority, by any means gains access

to or attempts to gain access to any

computerized

motor

vehicle

registration system; or

(b)
having lawful access to any

computerized

motor

vehicle

registration system, knowingly uses

or discloses information obtained

from such system for a purpose that

is not authorized; or

Unauthorized
access to
computerized Motor vehicle registration
system.

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(c) knowing that he is not authorized to

do so, receives information obtained

from any computerized motor

vehicle registration system and

uses,

discloses,

publishes,

or

otherwise

disseminates

such

information.

(2) A person who commits an offence

under subsection (1) shall be liable on

conviction-

(a) in the case of an individual, to

imprisonment for a term not

exceeding two years, or to a fine-

not exceeding four hundred

thousand shillings, or to both; or

(b) in the case of a body corporate, to

a fine not exceeding one million

shillings.

Interference with computerized motor vehicle
registration
system.

5E
A person commits an offence if the

person knowingly-

(a)
falsifies any record or information
stored in any computerized motor

vehicle registration system;

(b)
damages or impairs any

computerized motor vehicle

registration system; or

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(c) damages or impairs any duplicate

tape or disc or other medium on
which any information obtained

from a computerized motor vehicle

registration system is held or

stored, otherwise than with the

permission of the Registrar,

and shall be liable on conviction to a fine

not exceeding eight hundred thousand

shillings, or to imprisonment for a term not

exceeding three years, or to both.

29.
The Traffic Act is amended by inserting the

following new section immediately after section 6-

Insertion of

section 6A in

Cap 403.

Relocation

of
motor vehicles.
6A. (1) Where the owner of a motor vehicle

intends to move the motor vehicle

permanently to a place outside Kenya, the

owner shall forthwith, return the

identification plates and registration

certificate issued under this Act in respect of

the motor vehicle to the Registrar fof

cancellation.

(2) The Registrar shall, after cancelling

the registration certificate returned under

subsection- (1), issue a deregistration

certificate to the registered owner in such

form as may be prescribed.
30.
Section 9 of the Traffic Act is amended –
Amendment of

section 9 of Cap

403
.

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(a)
by inserting a new subsection immediately after

subsection (1) as follows-

(2) Upon the transfer of ownership of a

motor vehicle or trailer, the registered owner

thereof shall, within seven days from the date

of the transfer, inform the Registrar in the

prescribed form of the name, postal and email

addresses and telephone number of the new

owner and shall deliver the registration

certificate in respect of such vehicle to the

new owner, who shall forward the registration

certificate together with the prescribed fee to
the Registrar, whereupon the vehicle shall be

registered in the name of the new owner:

Provided that, where in any case the

registered owner of a motor vehicle fails to

comply with the provisions of this subsection,

the Registrar may, on being satisfied that the

registered owner has died, left Kenya, cannot

be traced, or has refused to comply with the

provisions of this subsection, cause the

vehicle to be registered in the name of the

new owner on payment of the prescribed fee.

(b)
in subsection (3), by deleting the expression

“subsection (I)” and substituting therefor the

expression ” subsections (1) and (2)”;

(c)
in subsection (5), by inserting the expression

“(2)” immediately after the expression

“subsection (1)”.

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31.
The Stamp Duty Act is amended by adding the

following proviso at the end of section 5 —

“Provided that the Government shall not charge

stamp duty twice where a person moves a mortgage

from one bank to another.”

32. Section 2 of the Capital Markets Act is amended by
inserting the following new definition in proper alphabetical

sequence —

“real estate investment trust” mean an

arrangement in respect of real estate or interest in real

estate of any description, structured in accordance

with the rules prescribed by the Authority to enable a

person taking part in the arrangement, whether by

becoming an owner of the property or any part of it or

otherwise, to participate in or receive profits or

income arising from the acquisition, holding,

management or disposal of the real estate or interest

in the real estate or sums paid out of such profits of

income.

33.
The Insurance Act is amended by inserting the

following new section immediately after section 30 —

No. 4

Amendment of
section 5 of

Cap.480.

Amendment of
section 2 of

Cap.485A

it
Insertion of

section 30A in

Cap.487.

Opening of a

branch.

30A.(1) An insurer registered under this Act

wishing to open a branch or a new place of

business in Kenya, or to change the location of

a branch, or an existing place of business, shall

apply to the Authority for approval to do so.

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(2)In considering an application under

subsection (1), the Authority shall take into

account —

(a)
the history and financial condition

of the insurer;

(b)
the adequacy of the capital base

and the structure of the insurer; •
(c)
the viability and earning prospects

of the branch; and

(d)
such other matter as may have a

bearing on the insurer or the

proposed branch.

(3)
There shall be payable, in respect of

every application under subsection (1), a fee of

twenty thousand shillings.

(4)
For the purposes of this section

“branch” means any permanent premises, other

than its head office, at which an insurer

transacts business in Kenya.

Insertion of

section 67G in

Cap.487.

34.The Insurance Act is amended by inserting a new

section immediately after section 67F as follows —

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Power to

protect the

assets of an

insurer.

Finance

67G.
(1) The Authority may, for the

purpose of protecting the interests of the policy

holders, assume control of the whole or part of

the insurer’s assets, and shall register any

instrument under the relevant law or take any

other appropriate action it may deem

necessary.

No. 4

(2) The Authority shall hold the directors

of the insurer to be jointly and severally liable

for the recovery of the assets under subsection

(1), where it establishes that the assets of the

insurer have been misappropriated.

35.
Section 113 of the Insurance Act is amended in

subsection (1) by deleting the words “Minister, through the

Commissioner” appearing in paragraph (b) and substituting

therefor the word “Authority”.

36.
Section 114 of the Insurance Act is amended by

deleting the word “Minister” wherever it occurs and

substituting therefor the word “Authority”.

37.
Section 115 of the Insurance Act is amended by

deleting the word “Minister” wherever it occurs and

substituting therefor the word “Authority”.

38.
Section 116 of the Insurance Act is amended by

deleting the word “Minister” appearing at the beginning of

the section and substituting therefor the word “Authority”

39.
Section 117 of the Insurance Act is amended by

deleting the word “Minister” wherever it occurs and

substituting therefor the word “Authority”.

Amendment of
section 113 of

Cap.487.

Amendment of
section 114 of

Cap.487.

Amendment of

section 115 of

Cap.487.

ii

Amendment of

section 116 of

Cap.487.

Amendment of
section 117 of

Cap.487.

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Amendment of
section 118 of

Cap.487.

Amendment of

section 8A of

Cap. 488.
40.
Section 118 of the Insurance Act is amended by

deleting the word “Minister” wherever it occurs and

substituting therefor the word “Authority”.

41.
Section 8A of the Banking Act is amended by

inserting the following new subsection immediately after

subsection (4) —

(5). Notwithstanding the provisions of this section,

the Central Bank may, subject to such conditions or

limitations as it may prescribe, permit an institution to
provide such services as it may, in any particular case,

specify, to its customers who are outside the country

through banking institutions located outside Kenya.

Amendment to

section 13 of

Cap. 488.

Amendment to

section 31 of

Cap. 488.

42.
Section 13 of the Banking Act is amended in

subsection (3) by inserting a comma and the words “other

body corporate” immediately after the word “company”

wherever it appears.

43.
Section 31 of the Banking Act is amended-
(a) in subsection (3) —

No. 19 of 2006.

(i)

by deleting the words “and

institutions licensed under this Act”

appearing in paragraph (b) and

substituting therefor the words

“institutions licensed under this Act

and institutions licensed under the

Microfinance Act, 2006”;

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(ii)

by deleting the words “institutions
licensed under this Act” appearing

in paragraph (c) and substituting

therefor the words “institutions

licensed under this Act and

intuitions licensed under the

Microfinance Act, 2006”;
(b)
in subsection (4), by inserting the

words “and institutions licensed under

the

Microfinance

Act,

2006”

immediately before the words “and

disseminating”.

(c)
in subsection (5), by inserting the

following new paragraph immediately

after paragraph (b) —

(c) a deposit-taking microfinance

institution licensed under the

Microfinance Act, 2006.

44.
Section 33 of the Banking Act is amended in

subsection (4) by deleting the word “Part” and substituting

therefor the word “Act”.

No. 4

Amendment of

section 33 of

Cap. 488.

168

Amendment of

section 11 of

45. Section 11 of the Central Bank of Kenya Act is

Cap.491.

amended

(a) in subsection (1), by deleting paragraphs (a) and

(b) and substituting therefor the following new

paragraphs —

(i)
a Chairperson;

(ii)
a Governor;

(b) by deleting subsection (2) and substituting

therefor the following new subsection —

(2) The directors appointed under

paragraph (d) of subsection (1) shall be

appointed by the President with the

approval of Parliament and shall hold

office for a period of four years but shall

be eligible for re-appointment for one

further term of four years.

(c)
in subsection (5), by deleting the words

“Governor, Deputy Governor” and substituting

therefor the words “Chairperson, Governor”;

(d)
in subsection (6) by deleting the words

“Governor, the Deputy Governor” and

substituting therefor the words “Chairperson, the

Governor”.
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2012

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46. Section 12 of the Central Bank of Kenya Act is
Arnendment of

amended —

section 12 of

Cap.49I

(a)
in subsection (1), by deleting the words

“Governor, as Chairman of the Bank” and

substituting therefor the word “Chairperson”;

(b) by inserting the following new subsections after

subsection (1) –

(1A)
The Chairperson shall preside at all

meetings of the Board.

(1B)
In the absence of the Chairperson at a

meeting, the members present shall elect one of

the members appointed under paragraph (d) of

section 11(1) to preside at that meeting of the

Board.

(c)
in subsection (2), by deleting the words

“Governor or the Deputy Governor” and

substituting therefor the words “Chairperson,

the Governor”.

(d)
in subsection (3), by deleting the words

“Chairman or the Deputy Chairman” and

substituting therefor the words “Chairperson or

the person”.

47. Section 13 of the Central Bank of Kenya Act is

amended by inserting the following new subsections

immediately before subsection (1) —
Amendment of

section 13 of

Cap.491.

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(1)
There shall be a Governor who shall be

appointed by the President through a

transparent and competitive process and with

the approval of Parliament.

(2)
The Governor shall hold office for a term of

four years, but shall be eligible for re-

appointment for one further term of four

years.

Repeal and

replacement of

section I 3B
or

Cap.491.

48. The Central Bank of Kenya Act is by repealing

section 13B and replacing it with the following new section —

Deputy

Governors.
13B.(1) There shall be two Deputy Governors

who shall be appointed by the President through

a transparent and competitive process and with

the approval of Parliament.

(2)
The Deputy Governors shall hold office

for a term of four years, but shall be eligible for

re-appointment for one further term of four

years.

(3)
The Deputy Governors shall perform

such functions as the Governor may from time to

time assign to them.

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(4) The Board shall appoint one of the

Deputy Governors to act in the office of

Governor whenever —

(a)
the position of Governor falls vacant in

the period before a substantive

appointment is made; or

(b)
the Governor is temporarily absent from

office.

(5) A Deputy Governor appointed under

subsection (4) shall, during the period of

appointment, exercise all the powers and perform

all the functions conferred on the Governor

under this Act under any other law.

49.
Section 33B of the Central Bank of Kenya Act is

amended by deleting subsection (6) and substituting therefor

the following new subsection –

(6) A licence issued under this section shall, unless

earlier revoked, expire on the 31st December next

following the date of issue:

Provided that where an application for

renewal is made under section 33C, the licence shall

be deemed to continue in force until the application

for renewal is determined.

50.
The Central Bank of Kenya Act is amended by

inserting a new section immediately after section 36 as

follows —

Amendment of
section 33B of

Cap. 491.

Insertion of

section 36A in

Cap.491.

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Publication and

sharing of

information.

Finance

2012

36A. (1)
The Central Bank shall publish in

the Gazette, the Central Bank website and

two daily newspapers of national circulation

the following information —

(a)
the weighted average lending and

deposit rates for all banks and

financial institutions;

(b)
the interest rate spread and its

composition;

(c)
a simplified version of the balance

sheets and income statements.

(2) Notwithstanding the provisions of

this section, a bank shall disclose any positive

or negative information of its customers to

the licensed credit reference bureaus, where

such information is reasonably required for

the discharge of the functions of the banks

and the licensed credit reference bureaus.

Insertion of
section 36B of

Cap.49I.

51.
The Central Bank of Kenya Act is amended by

inserting a new section immediately after section 36A as

follows —

Reports to

Parliament.
36B.
The Central Bank shall, on a quarterly

basis, make and present to Parliament a

report on the key economic and banking

sector aggregate.

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52.
Section 27 of the Kenya Information and

Communications Act, 1998 is amended in subsection (2) by

inserting the following paragraph immediately after

paragraph (g) —

Amendment of

section 27 of Act

No.2 of 1998

(h)

the

registration
telecommunication services.

of

subscribers

to

53. Section 2 of the Microfinance Act, 2006 is amended
Amendment of

by inserting the following definition in proper alphabetical
section 2 of Act
No. 19 of 2006

sequence —

“control”, in relation to a company or other body

corporate, includes-

(a)
to influence, whether directly or indirectly, the

composition of at least half of the board of

directors of the company or other body

corporate;

(b)
to hold, directly or indirectly, whether

personally or through a holding company or

companies or subsidiaries thereof, or in any

other way, an aggregate of fifty per centum or

more of the voting power of the company or

body corporate, whether alone or with

associates or with other associates of the

company or other body corporate; or

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No. 4
Finance

2012

(c) the ability, in the opinion of the Central Bank,

to exercise a dominant influence over the

management or policies of the company or

other body corporate on the basis of an

agreement or by any other means, regardless
of the amount of formal ownership or voting

rights.

Amendment of

section 17 of Act
No. 19 of 2006.

Amendment of

section 18 of Act

No 19 of 2006.

Amendment of

section 19 of Act
No. 19 of 2006.
54.
Section 17 of the Microfinance Act, 2006 is amended

in subsection (1) by inserting the words “or his associates”

immediately after the words “single borrower”.

55.
Section 18 of the Microfinance Act, 2006 is amended

by deleting subsection (1) and substituting therefor the

following new subsection —

(1) No institution shall grant a loan or credit

facility to its associate, or to an officer or member of

staff of the institution, or their associates, in excess

of such limits as the Central Bank may, by

regulations, prescribe.

56.
Section 19 of the Microfinance Act, 2006 is

amended-

(a) by deleting subsection (1) and substituting

therefor the following new subsection –

(1) Subject to subsections (2) and (3), no

person shall hold, directly or indirectly, or

otherwise have a beneficial interest in, more

than twenty-five percent of the shares of an

institution.

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2012

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No. 4

(b) by renumbering subsection (5) as subsection (6)

and inserting the following new subsection-

(5) Where any share is held by a company

or other corporate body, or by a nominee on

behalf of another person, the company or

other corporate body, or the nominee, as the

case may be, shall disclose to the Central
Bank the full particulars of the individual

person who is the ultimate beneficial owner

of the shares.

57. Section 21 of the Microfinance Act, 2006 is amended

by inserting the following new paragraphs immediately after

paragraph (d) –

(e) was a director or senior officer of an institution
that has been liquidated or is under liquidation

or statutory management under any written law

dealing with banking, insurance, investment or

other financial services:

Provided that such a director or senior

officer shall not be disqualified unless the

Central Bank forms a reasonaole opinion that

such a director or senior officer may have,

directly or indirectly through commission or

omission, contributed to the collapse of the

financial entity;

Amendment of

section 21 of Act

No. 19 of 2006.

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No.
4

Finance

2012

(0 has contravened the provisions of any law

designed for the protection of members of the

public against financial loss due to the

dishonesty or incompetence of, or malpractices

by, persons engaged in the provision of

banking, insurance, investment or other

financial services;
(g)
has taken part in any business practices that, in

the opinion of the Central Bank, ‘ were

fraudulent, prejudicial or otherwise improper or

which otherwise discredited his methods of

conducting business; or

(h)
has taken part in or been associated with such

other business practices as would, or has

otherwise conducted himself in such manner as

to cast doubt on his competence and soundness

of judgment.

Insertion of a
new section 22A

in Act No. 19 of

2006.

58. The Microfinance Act, 2006 is amended by inserting

the following section immediately after section 22-

Assessment of

officers.
22A. (I) Notwithstanding any other

provision of this Act, the Central Bank may,

from time to time, where it deems it necessary

to do so, carry out an assessment of the

professional and moral suitability of a person

managing or controlling an institution.

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2012

Finance

No.
4

(2) An assessment under this section

shall be in accordance with such criteria as

may be prescribed.

(3)
Where, upon an assessment under this

section, the Central Bank is satisfied as to the

professional and moral suitability of the

person managing or controlling an institution,

it shall so certify in writing to the institution.

(4)
A person who, upon an assessment

under this section, is not certified by the

Central Bank as fit and proper to manage or

control an institution, shall be deemed to be

disqualified from holding office and shall

cease to hold office.

59. Section 34 of the Microfinance Act, 2006 is

amended-

(a) in subsection (3A), by inserting the words

“and institutions licensed under the

Cap 488

Banking Act” immediately after the words
“licensed under this Act”;

Amendment of

section 34 of Act
No. 19 of 2006.

fi

No. 4

Amendment of

section 45 of Act
No. 19 of 2006.

178

Finance

2012

(b) in subsection (4) —

(i)
by deleting the word “and”

appearing immediately after the

words “Central Bank”; and
(ii)
by inserting the word “and

institutions licensed under the
Cap 488
Banking Act” immediately after

the words “licensed under this

Act”;

(c) in subsection (5) by deleting all the words

appearing immediately after the words

“clients of institutions” and substituting

therefor the following-

“licensed under this Act and

Cap 488
institutions licensed under the

Banking Act, and disseminating the

information among such institutions

for use in the ordinary course of

business, subject to such conditions or

limitations as may be prescribed”.

60. Section 45 of the Microfinance Act, 2006 is amended

by-

(a) inserting the following new subsection

immediately after subsection (1) –

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2012

Finance

No. 4

(2) Where a company registered under

the Companies Act as a deposit-taking

micro finance institution fails to acquire a

licence to operate under this Act within a

period of one year from the date of such

registration, the company shall forthwith

cease the use of the words “deposit taking

microfinance” or the acronym “DTM” in its

name.

(b) by renumbering the existing subsection (2) as

subsection (3).

61.The Microfinance Act, 2006 is amended by inserting

the following section immediately after section 51-

Insertion of

section 51 in the

Act No. 19 of

2006.

False

advertising.

52. (1) Any entity, institution or other person

who issues any advertisement, brochure,

circular or other document inviting any person

to make a deposit which –

(a)
falsely represents that the entity,

institution or person is authorized to

accept deposits or is otherwise

licensed under the provisions of this

Act; or
(b)
is issued contrary to any direction

given by the Central Bank under the

provisions of subsection (2),

commits an offence.

ry

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Finance

2012

(2) The Central Bank may, at any time, direct an

institution to withdraw, amend or refrain from
issuing any document to which subsection
(1)

applies.

(S.2)

s
lit

FIRST SCHEDULE

Amendment of the Fifth Schedule to the Customs and Excise Act, Cap.472

FIFTH SCHEDULE
PART I

1.
Delete the following tariff numbers, descriptions and rates of excise duty thereof

Tariff No.
Goods Description. Rate of Duty.

2203.00.10
Stout and porter Sh.65 per litre

2203.00.90 Other beer made from malt Sh.65 per litre
2206.00.10
Cider
Sh.55 per litre
2206.00.20 Opaque beer
Sh.55 per litre

2206.00.90 Other fermented beverages
Sh.55 per litre

2204.10.00 Sparking wine of fresh grapes including fortified wines Sh.70 per litre or 35%
2204.21.00
Other wine grape must with fermentation prevented or

arrested by the addition of alcohol in containers holding 2

litres or less

Sh.70 per litre or 35%

C

2710.19.22
Goods Description.

Other wine grape must with fermentation prevented or

arrested by the addition of alcohol in containers holding

more than 2 litres
Other grape must

Vermouth and other wine of fresh grapes flavoured with

plants or aromatic substances in containers of 2 litres or less

Vermouth and other wine of fresh grapes flavoured with

plants or aromatic substances in containers of more than 2

litres.

Illunhinating Kerosene (IK)

Per 1000 litre @ 20°C

Sh.5,044.00

Tariff No.

2204.29.00
2204.30.00
2205.10.00
2205.90.00
Rate of Duty.

Sh.70 per litre or 35%

Sh.70 per litre or 35%
Sh.70 per litre or 35%
Sh.70 per litre or 35%

2.
Insert the following tariff numbers, descriptions and rates of excise duty thereof –

Tariff No.

Goods Description.

Rate of Duty.
2203.00.10

2203.00.90
2206.00.10

2206.00.20
2206.00.90
Stout and porter
Other beer made from malt

Cider

Opaque beer
Other fermented beverages
Sh.70 per litre or 40% of RSP
Sh.70 per litre or 40% of RSP
Sh.70 per litre or 40% of RSP
Sh.70 per litre or 40% of RSP
Sh.70 per litre or 40% of RSP

O
o-/

00

O

Tariff No.

2204.10.00
2204.21.00
2204.29.00

Goods Description.

Sparking wine of fresh grapes

including fortified wines, grape
must

Other wine in containers

holding 2 litres or less

Other wine in containers

holding more than 2 litres

Other grape must

Vermouth and other wine of

fresh grapes flavoured with

plants or aromatic substances

in containers of 2 litres or less

Vermouth and other wines of

such fresh grapes flavoured

with plants or aromatic

substances, in containers of

more than 2 litres

Rate of Duty.

Sh.80 per litre or 40% of RSP
Sh.80 per litre or 40% of RSP
Sh.80 per litre or 40% of RSP
Sh.80 per litre or 40% of RSP
Sh.80 per litre or 40% of RSP
Sh.80 per litre or 40% of RSP

2204.30.00

2205.10.00
2205.90.00

A
00

(RSP means Retail Selling Price)

PART
II

Delete the existing Part II and substitute therefor the following new Part II

00

Excise duty in respect of cigarettes shall be as shown hereunder —

r->

Description

Rate of Excise Duty

Cigarettes

Sh.1200 per mille or 35% of retail selling price.
PART III

Insert the following new item (6) immediately after item (5) —

6.

Excise duty on pre-mixed alcoholic beverages of tariff No 2208.90.90 (e.g. Ready to Drink) of

strength not exceeding 10 percent by volume of alcohol sh ill be Shs.70 per litre or 40% of the

O

retail selling price.

t•J

SECOND SCHEDULE

(s.8)
O
is

Amendment of the Eighth Schedule to the Value Added Tax Act Cap 476

EIGHTH SCHEDULE

Insert the following new clause 29 in Part A of the highth Schedule —

29. “All goods, including materials, supplies, equipment and machinery procured or sourced by the Rural

Electrification Authority for the implementation of the Rural Electrification Programme”.

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