SPEECH BY HIS EXCELLENCY HON. UHURU KENYATTA, C.G.H.

, PRESIDENT AND COMMANDER IN CHIEF OF THE DEFENCE FORCES OF THE REPUBLIC OF KENYA DURING THE 2013 TAXPAYERS AWARD CEREMONY, KENYATTA INTERNATIONAL CONFERENCE CENTRE, NAIROBI, 22ND OCTOBER, 2013 Esteemed Taxpayers, Ladies and Gentlemen, It gives me much pleasure to join you today to preside over the 2013 Taxpayers' Day, now in its 10th edition since inception. I thank you all for making time to be here. This occasion is important. It is the occasion when we recognise and celebrate our taxpayers for their contribution and productivity to our national development agenda, and, indeed, our civilization. This years Taxpayers Award Ceremony comes soon after our 2013 Mashujaa Day celebrations; the day when we commemorated our forefathers and foremothers who liberated us to be a free people and to control our destiny. We must be self-reliant, if as a people, we are to sustain our dignity. For this reason, I applaud you, our taxpayers, for being patriotic and paying your taxes and as such enabling us to take charge of our countrys destiny. Ladies and Gentlemen, The Taxpayers Award is the fruit of sustained close collaboration between you, the taxpayers, and the management of the Kenya Revenue Authority. I commend the Board, Management and Staff of the Authority for continuing a rewarding partnership with our esteemed taxpayers, and for enabling us recognise and thank them. Please keep up the good work and enable Kenya afford her sovereign aspirations. Todays event comes at an early stage of my Administration. This is welcome as it affords my Government an opportunity to directly engage and forge a strong partnership with our key financiers the taxpayers. Your support is indispensable to the journey we have set for ourselves to first transform our economy and ultimately our entire society, and secondly to ensure we remain truly an independent nation. There is no doubt that, compared to where we were in 1963, we have made commendable progress since then in education, health, construction of road network countrywide, provision of clean water, rural electrification, to mention but a few. But we are still as a country, far from achieving fully our development potential. Domestic and external factors have disrupted the momentum of economic growth.

Unemployment, particularly among our youth, food insecurity and widespread poverty, are still major challenges requiring our action. As Government, we remain committed to tackling these challenges and achieving a Better Kenya For All our people. The broad development agenda of my Administration is, therefore, intended to address these challenges holistically and comprehensively. We want growth of our economy to be more robust and more inclusive, because this is the only means of moving Kenya to the next level of prosperity. The fundamental objective of our Government is the attainment of high rate of economic growth and sustainable development, within a stable and secure environment. Indeed, this is the sure way to sustain our dignity as a people.

Distinguished Taxpayers, Ladies and Gentlemen, We have elaborated our economic policies as well as structural reform measures in various policy documents. In particular, the Budget Policy Statement, the Budget Highlights for 2013/14 fiscal year, as well as the Second Medium Term Plan of Vision 2030, which I launched a couple of weeks ago, amply set out the measures we are implementing to put our country on the path of sustainable development. First, we must urgently take measures to reduce the cost of production and make Kenyan products cheaper and more competitive. Investment in transport and logistics as well as energy and other infrastructure will achieve this objective. Construction of the standard-gauge railway is about to commence. Upon its completion, we expect transport costs to reduce significantly. This can only be great news to consumers and producers in our region. Secondly, we know a friendly investment environment is indispensable if we are to realise sustainable development. To this end, we remain committed to maintaining inflation at a low level and ensuring that the Kenya shilling exchange rate is stable. In addition, we are deepening structural reforms as well as taking steps to improve security and law enforcement, interventions that are critically needed to encourage investment and therefore generate more jobs. Furthermore, we have taken comprehensive measures to invest in rural development and agriculture, both to raise incomes and achieve food security. The aim is to expand food supply, reduce food prices and support an expanded agro-processing industry. Obviously, the other outcome is to generate employment and enhance the wealth of our rural folks.

Finally, we are continuing to invest in the provision of high quality health services, but at no cost to the consumers of those services. Likewise, we are expanding the social safety net to reduce the unfair burden that poverty and illness visit on households, obstructing long-term growth and development. Our Government has its focus firmly fixed on swift, inclusive and sustainable economic transformation and growth. Dear Taxpayers, Ladies and Gentlemen, I am aware of concerns raised by Kenyans about the possible impact of recent security-related challenges on the growth momentum our national economy. These concerns are legitimate. However, even with the Westgate incident, if the buoyant activity at the Nairobi Securities Exchange is anything to go by, our economy remains resilient. The mood at the Exchange is a good means of gauging investor confidence. All sectors of our economy are gaining momentum. This confidence is not mistaken: investors do not stake their fortunes on mere hunch, or unfounded hopes. It is because the fundamentals of our economy are solid and dependable. This is thanks to the sound economic policies we have pursued in the last several years under our own Economic Programme supported by the International Monetary Fund. Interest rates remain stable, and for a while now, are the lowest in our region. Likewise, the Kenya shilling exchange rate against other currencies has been stable while inflation has been confined to a single-digit range for some time. I stand here to reassure you of Government's commitment to continue implementing sound economic policies in order to ensure the macroeconomic environment remains favourable to the investing community. We are confident of our economy's vibrancy, dynamism and resilience. Distinguished Taxpayers, Ladies and Gentlemen, I am grateful that we have worked hard, and continue to strive for sound macroeconomic stewardship. But to ensure we remain on the right economic path, security is critical. In this regard, I want to declare that we are going further to protect our growth by enhancing government investment in security. We will shortly commence a comprehensive medium-term security reform strategy. As part of this programme, we will enhance infrastructure development, equipment, mobility, training and skill development, forensic research and partnership with communities and other security agencies. The aim is to institute robust, visible, effective and sustainable improvements to

our security sector. That is, security capable to defend our country, protect our people and secure our prosperity. Distinguished Taxpayers, Ladies and Gentlemen, All these good things we intend to do will require substantial financing and hence the need for us to take further steps to realize fully our tax revenue potential. This brings me to the subject of tax reforms and revenue mobilisation. Without a doubt, there exists great potential to grow the national revenue yield, even under the existing taxes and rates of taxation. Through an appropriate and facilitative policy regime and effective tax administration, we can strengthen revenue and improve growth prospects. In order to support a high level of broad-based economic growth and development, we must embark on the Second Generation Tax Reforms, with emphasis on tax policy as well as institutional and legal reforms underpinning tax administration. Over the medium term, our Government's tax reform agenda shall cover institutional and legislative reorganisation, investment in infrastructure and skill development and building partnership with taxpayers. To begin with, the Kenya Revenue Authority will be reformed. The aim of the reforms is to make it responsive, efficient and effective in revenue collection, trade facilitation and securing our borders. In this endeavour, we are partly informed by recent border security challenges, as well as the East African Community Common Market Protocol, which requires the establishment of a Single Customs Territory. The effect of that is free movement of goods in the region. Reorganising the Kenya Revenue Authority will entail the establishment of two semi-autonomous entities. That is, the Domestic or Inland Tax Agency and the Customs and Border Control Agency. With respect to legislative reorganisation, the intention is to further review and modernise outstanding tax legislations, particularly excise and income tax regimes. By December, I expect an Excise Management Bill to be submitted to the National Assembly. This Bill will make the law on excise management simple, modern and easier to comply with. It will also align it with international best practice. Secondly, in order to conform to the Constitution, the Tax Appeals Tribunal Bill has been submitted to Parliament, and goes into final debate this week. Likewise, the process to consolidate and standardise all tax administration procedures is underway. Presently these procedures are scattered in various legislations. The draft Taxpayer Code Bill should be ready by March, 2014.

Thirdly, owing to increased exploration activity in our extractive industry, we must develop a robust fiscal regime to regulate and enforce taxation of income generated in this sector. We are reviewing the fiscal regimes currently existing under various legislations and, taking into account international best practice, we intend to consolidate them so that we have a clear framework that is applicable to the extractive industries in this country. Distinguished Taxpayers, Ladies and Gentlemen, I see infrastructure and skills development as pillars of our tax reform agenda. I am happy to note the tremendous progress that we have achieved in this regard, but hasten to caution that much remains to be done. To entrench efficiency, we are investing in the automation of our tax system. This will enable taxpayers submit their returns from the comfort of their offices and homes. By March 2014, we will have rolled out production accounting under the excise tax management system. All firms dealing in products that attract excise duties will be covered under this roll-out. Additionally, we want to make it cheaper, faster and easier for importers to lodge their import documentations, that is: ships notification of arrival list, ship-and air-cargo manifests, Import Declaration Form (IDF), pre-clearance licenses and permits issued by government agencies. All required payments will be made through the planned single portal. The roll-out of the National Single Window system is scheduled for the end of this month, midnight of October, 31, 2013 and will commence with pre-clearance live of the documentations which I have mentioned earlier. I understand the Revenue Authority plans to intensify on-job training in order to impart necessary skills without disrupting services. I encourage the Authority to form partnerships with more experienced revenue departments in other parts of the world through exchange programmes; and also enforce measures to enhance integrity in tax administration. Total integrity must be the philosophy for all of us. Distinguished Taxpayers, Ladies and Gentlemen, The Government is implementing the reforms I have enumerated in order to better serve taxpayers and make it easy for you to comply. This way, we expect revenue yield to be enhanced. This is a partnership to ensure that every eligible income earner makes their contribution through payment of tax. On our part, Government will invest these resources in programmes that will facilitate private sector growth. The partnership between our

Government and you, our taxpayers, is a partnership to achieve our shared vision of transforming Kenya into a middle income country by year 2030, if not earlier. As I conclude my remarks, let me emphasize that it is our civic duty to pay taxes to finance our development as a modern State. I, therefore, urge all eligible Kenyans to embrace their patriotic duty and pay taxes. Everyone who fails to pay tax sabotages that shared and noble vision of transforming Kenya into a middle income country. The attainment of Vision 2030 depends on all taxpayers meeting their tax obligations. Thank you once again for finding the time to be here today. We value your presence and support, and I look forward to a dynamic and productive partnership with you as we continue the fight against poverty. May God richly reward your work. Thank you very much, and may God bless you all.