To what extent is the County Government a taxing master?

County governments’ authority to collect business taxes.

The Constitution of Kenya creates a decentralized system of governance and administration. In order to exercise the decentralized powers and duties, county governments are authorized to raise their own revenue. Whereas the national government still collects a significant part of revenue, the Constitution and other laws have outlined the taxes, levies and fees that county governments can collect. Broadly speaking, county governments may impose entertainment taxes, property taxes and any other taxes they are authorized to impose. The taxes, levies, fees and charges target local residents and their businesses.

In the business context, the national government is in charge of functions such as the registration of business entities. On the other hand, county governments can issue and levy charges for licenses such as business permits. The amount of fees charged for a permit depends on the nature of the business, the size of its office and the number of employees.

County governments issue trade licenses for diverse economic activities including distribution services. Manufacturers and distributors are required to pay for distribution licenses in each county where they distribute, offload or supply goods and services.

In addition, county governments are empowered to collect cess fees, also referred to as infrastructure maintenance fees. This is a form of tax charged on fishing and agricultural products as well as extractives such as quarry products as they move across county borders. It is levied by the county from which the goods are produced and is collected at the source or during transportation of the products at designated roads. A transporter is required to produce evidence of paying cues in the county of origin. However, the transporter or trader has to pay market fees to access or sell the goods in the destination market. This is referred to as a market levy.

County governments are also authorized to charge fees on outdoor advertising. For instance, a county government can levy fees for the external branding of motor vehicles. The fees are charged on branded vehicles belonging to a business based in the county or that drive-in or through the county. In enacting laws, counties must follow the Constitution and ensure that the taxes, fees and levies charged will not impact national economic policies and economic activities negatively. Moreover, where a fee is to be charged on a service, the law requires that the fee should not exceed the cost of providing such service.

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