In the third and final part of our key highlights to the Business Laws (Amendment) Act 2020 (the Act), we explore the changes to the National Construction Authority Act 2011, the reliefs granted under the Occupational Safety and Health Act 2007, and various tax laws.

1. Amendments to the National Construction Authority Act 2011 (the NCAA)

Enforcement of the Building Code

• Previously, it was not clear whether enforcement of the Building Code fell within the domain of the National Construction Authority (the NCA), the County Governments, or both. This conflict/duality often led to conflict between the two organs.
• The Act now addresses this conflict by making the NCA responsible for enforcing compliance with the Building Code.
• County Governments retain the power to approve building plans, issue construction permits and ensure compliance with the conditions in the construction permits while the NCA will have the mandate of enforcing and ensuring that contractors comply with the Building Code.
• In this regard, the County Governments will be responsible for the issuance of pre-construction approvals stated above, while the NCA will be responsible for enforcing the Building Code during and after the construction phase.  

Penalties for failure to comply with construction standards

• The Act grants investigating officers the power to penalise persons who fail to comply with an order by an investigating officer to ensure compliance with the construction standards under the new section 23(3A). Failure to ensure compliance may attract a fine of up to KES 1,000,000, up to three years’ imprisonment, or both.
• The aim of this amendment is to minimise defects in the execution and post-construction stages of projects.

Mandatory inspection of construction sites

• The Act grants the NCA the power to conduct mandatory inspections at any time on sites under construction.

2. Other reliefs granted in line with the objective of facilitating the ease of business

The Act also amends other laws including the Occupational Safety and Health Act 2007 (OSHA), Industrial Training Act Cap 237 Laws of Kenya (ITA) and various tax laws.

Deadline for compliance with workplace registration requirements under the OSHA

• Under section 44 of the OSHA, all businesses are required to undertake registration of their premises prior to occupying or using any premises as a workplace.
• The Act amends section 44 by providing an exemption for new businesses with fewer than 100 employees, which will now have 12 months to comply with the above workplace registration requirements. This amendment facilitates the prompt start-up of new business initiatives.

Changes to intervals for payment of penalties under the ITA

• Any penalties for failing to pay training levies will be payable annually rather than monthly as was previously the case. This aligns the payment of penalties with the annual payment of training levies.

Tax amendments seeking to promote the use of the Standard Gauge Railway (SGR)

• The Income Tax Act: Amended to provide for investment deduction at the rate of 150% of the capital expenditure incurred in the construction of bulk storage and handling facilities for supporting the SGR operations. To qualify for the investment deduction, the capital expenditure incurred must be at least KES 5 billion.
• The Miscellaneous Fees and Levies Act 2016: Amended to provide exemptions from import declaration fees and railway development levy for goods imported or purchased for the construction of bulk storage facilities for supporting the SGR operations with a minimum capacity of 100,000 metric tonnes of supplies. In both instances, the exemptions are subject to the approval of the Cabinet Secretary responsible for transport.
• The Excise Duty Act 2015: Amended to introduce excise duty at the tax rate of 25% for imported glass bottles (excluding imported glass bottles for packaging pharmaceutical products).

Conclusion

These forward-facing amendments seek to ease the regulatory regime for smaller businesses and enhance the safety requirements for construction projects in Kenya. They also encourage local manufacturing and offer incentives for the support of the SGR operations, thus propagating the development of local industrial initiatives.