Thursday, 26 May 2016

ENVIRONMENTAL POLICIES AND LEGAL FRAMEWORKS AT A GLANCE


1.1 POLICIES

1.1.1 National Environmental Action Plan (NEAP)


According to the Kenya National Environmental Action Plan (NEAP, 1994) the Government recognized the negative impacts on ecosystems emanating from industrial, economic and social development programmes that disregarded environmental sustainability. Established in 1990, the Plan’s effort was to integrate environmental considerations into the country’s economic and social development. The integration process was to be achieved through a multi-sectoral approach to develop a comprehensive framework to ensure that environmental management and the conservation of natural resources are an integral part of societal decision-making. Under the NEAP Process, Environmental Impact Assessment (EIA) was introduced, and among the key participants identified were the industrialists, business community and local authorities.

1.1.2 National Policy on Water Resources Management and Development


While the National Policy on Water Resources Management and Development (1999) enhances a systematic development of water facilities in all sectors for the promotion of the country’s socioeconomic progress, it also recognizes the by-products of these processes as waste-water. It, therefore, calls for the development of appropriate Sanitation Systems to protect people’s health and water resources from pollution. Projects should therefore be accompanied by corresponding waste management systems to manage wastewater and other wastes emanating therefrom. The same policy requires that such projects should undergo comprehensive E.I.As.

1.1.3 Policy Guidelines on Environment and Development


Amongst the key objectives of the Policy Paper on Environment and Development (Sessional Paper No. 6 of 1999) are: (a) the need to ensure that from the onset, all development policies, programmes and projects take environmental considerations into account, and (b) to ensure that an immediate Environmental Impact Assessment (EIA) report is prepared for all kinds of developments before implementation. Under the Sessional Paper No. 6 of 1999, broad categories of development issues, amongst them being the Human Settlement Sector, have been covered that require sustainable approach. The policy recommends the need for enhanced re-use/recycle of residues including wastewater, use of low non-waste technologies, increased public awareness and appreciation of clean environment. It also encourages participation of stakeholders in the management of wastes within their localities. In respect to Human Settlement, the paper encourages better planning in both rural and urban areas, and provision of basic needs such as water, drainage and waste disposal facilities among others.

1.2 THE LEGAL FRAMEWORK

1.2.1. The Constitution of Kenya


The Constitution of Kenya is the supreme law of the Republic and binds all persons and all State organs at all levels of government. Kenyans passed a new constitution in a referendum held on 4 August 2010, and the State promulgated it on the 27th September 2010 into Law. It repealed the older version drafted and at Lancaster, United Kingdom, in 1964. The Constitution of Kenya, 2010 provides the broad framework regulating all existence and development aspects of interest to the people of Kenya, and along which all national and sectoral legislative documents are drawn.

In relation to the environment, Article 42 under Chapter Four on the Bill Of Rights confers to every person the right to a clean and healthy environment, which includes the right to have the environment protected for the benefit of present and future generations through legislative measures, particularly those contemplated in Article 69, and to have obligations relating to the environment fulfilled under Article 70. Chapter 5 of the Constitution enshrines the main pillars on which the 77 environmental statutes are hinged.

Part 1 of the Chapter 5 dwells on land, outlining the principles informing land policy, land classification as well as land use and property. The second part of Chapter 5 directs focus on the environment and natural resources. It provides a clear outline of the State’s obligation with respect to the environment which obligations are outlined below:-
§   Ensure sustainable exploitation, utilization, management and conservation of the environment and natural resources, and ensure the equitable sharing of the accruing benefits;
§  Work to achieve and maintain a tree cover of at least ten percent (10%)of the land area of Kenya;
§  Protect and enhance intellectual property in, and indigenous knowledge of, biodiversity and the genetic resources of the communities;
§  Encourage public participation in the management, protection and conservation of the environment;
§  Protect genetic resources and biological diversity;
§  Establish systems of environmental impact assessment, environmental audit and monitoring of the environment;
§  Eliminate processes and activities that are likely to endanger the environment; and
§  The station being constructed will impact on sensitive components of the physical and natural environment hence need for a clearly spelt out environmental management plan to curb probable adverse effects to the environment.

The Constitution further makes provisions on enforcement of environmental rights as well as establishment of legislation relating to the environment in accordance with the guidelines provided in this chapter. In this regard, it provides that:

§  In conformity with the Constitution of Kenya, 2010, every activity or project undertaken within the Republic must be in tandem with the State’s vision for the national environment as well as adherence to the right of every individual to a clean and healthy environment.
§  Utilise the environment and natural resources for the benefit of the people of Kenya.

1.2.2. The Environment Management and Coordination Act, 1999


This Act defines the legal and administrative co-ordination of the many diverse sectoral initiatives in environment. This Act harmonizes the sector-specific legislations touching on the environment in a manner designed to ensure wholesome protection of the environment. This Act is guided by the policies of the National Environmental Council, while the day-to-day enforcement falls under the Director General of the National Environmental Management Authority (NEMA). Thus, NEMA enforces the Act on behalf of the Minister responsible for Environment. Its functions include:-

        i.            The coordination of various environmental management activities;  Initiation of legislative proposals; Research, investigations, and surveys on the field of environment;
     ii.            Creation of environmental education and awareness programmes;
   iii.            Advise the government on regional and international agreements to which Kenya is party to;
   iv.            Executing the Environmental Impact Assessment (EIA) under the Environmental Impact (Assessment and Auditing) regulations, 2003, among other duties.

1.2.3. The Petroleum Act, 1972 (Cap 116)


Implementation of the Petroleum Act has witnessed several challenges in the petroleum sector, which include:

·         proliferation of substandard petroleum;
·         dispensing and storage sites which pose environment health and safety risks;
·         diversion of petroleum products destined for export into the local market by unscrupulous business people to evade tax; and
·         dominance of the market by a few companies among others.

The Government of Kenya has noted these challenges in its Energy Policy contained in Session Paper No. 4 of 2004 on Energy and recommended review of the Petroleum Act Cap 116 and other energy sector statutes and the introduction of a new energy sector legislation to cover petroleum, electricity and renewable energy. Session Paper No. 4 of 2004 on Energy also recommended the formation of a Single Energy Sector Regulator to regulate electricity, downstream petroleum, renewable energy and other forms of energy.

1.2.4. The Occupational Safety and Health Act, 2007


This is an Act of Parliament which provides for: the safety, health and welfare of workers and all persons lawfully present at work places; the establishment of the National Council for Occupational Safety and Health; and for connected purposes. The Act seeks to:

·         Secure safety and health for people legally in all workplaces by minimization of exposure of workers to hazards (gases, fumes & vapours, energies, dangerous machinery/equipment, temperatures, and biological agents) at their workplaces.
·         Prevent employment of children in workplaces where their safety and health is at risk.
·         Encourage entrepreneurs to set achievable safety targets for their enterprises.
·         Promote reporting of work-place accidents, dangerous occurrences and ill health with a view to finding out their causes and preventing of similar occurrences in future.
·         Promote creation of a safety culture at workplaces through education and training in occupational safety and health.

Failure to comply with the OSHA, 2007 attracts penalties of up to KES 300,000 or 3 months jail term or both or penalties of KES 1,000,000 or 12 months jail term or both for cases where death occurs as a consequence of employer’s action or inaction. The Occupational Safety and Health Act (OSHA) 2007 repealed the Factories and Other Places of Work Act. Anything done under the provisions of the Factories and Other Places of Work Act including subsidiary legislation issued before the commencement of the OSHA 2007 shall be deemed to have been done under the provisions of this Act.

The Factories and Other Places of Work Act had over the years passed several subsidiary rules and regulations for effective implementation of the Act. All these regulations, as long as it is not inconsistent with OSHA 2007, remains in force until repealed or revoked by subsidiary legislation under the provisions of OSHA 2007 and shall for all purposes be deemed to have been made under this Act.

These regulations include:

·         The Factories (Cellulose Solutions) Rules 1957;
·         The Factories (Wood Working Machinery) Rules 1959;
·         The Factories (Dock) Rules 1962;
·         The Factories (Eye Protection) Rules 1978;
·         The Factories (Electric Power) (Special) Rules 1978;
·         The Factories (Building Operations and Works of Engineering Construction)
·         The Factories and Other Places of Work (Health & Safety Committees)
·         The Factories and Other Places of Work (Medical Examination) Rules 2005;
·         The Factories and Other Places of Work (Noise Prevention and Control)
·         The Factories and Other Places of Work (Fire Risk Reduction) Rules 2007;
·         The Factories and Other Places of Work (Hazardous Substances) Rules 2007.

The scope of OSHA 2007 has been expanded to cover all workplaces including offices, schools, academic institutions and plantations. It establishes Codes of Practices to be approved and issued by the Director, Directorate of Occupational Health and Safety (DOHS) for practical guidance of the various provisions of the Act.
Machinery safety to include:

·         Safe use of machinery, plant and equipment;
·         Prime makers and transmission machines;
·         The maintenance, construction of fencing safeguards;
·         The statutory requirements of various machines, plants and equipment (hoists and lifts, chains and ropes, cranes, steam receivers and containers, air receivers, cylinders for compressed liquefied and dissolved gases and refrigeration plants).

Chemical safety including:

·         Handling, transportation and disposal of chemicals and other hazardous substances;
·         Labelling and marking of chemical substances;
·         Control of air pollution, noise and vibrations;
·         Redeployment on medical advice.

1.2.5. The Water Act 2002


Part II, section 18, of the Water Act, 2002 provides for National Monitoring and Information Systems on water resources. Sub-section 3 thereof allows the Water Resources Management Authority to demand from any person or institution, specified information, documents, samples or materials on water resources. Under these rules, specific records may be required to be kept by a facility operator and the information thereof furnished to the authority.
Section 73 of the Act allows with a holder of a license (licensee) to supply water to develop operational guidelines for purposes of protecting water sources from degradation. Section 75 (1) allows a Licensee to construct and maintain drains, sewers and other works for intercepting, treating or disposing of any foul water arising or flowing upon land for preventing pollution of water sources within his/her jurisdiction.

1.2.6. The Public Health Act (Cap. 242)


Under this Act, every local authority or health authority is mandated to take all lawful, necessary and reasonable practicable measures to prevent all injurious conditions in premises, construction condition or manner of use of any trade premises. Under this Act, nuisances include: any noxious matter or waste water, flowing or discharged from any premises wherever situated, into any public street, or into the gutter or side channel of any street or watercourse; or any accumulation or deposit of refuse or other offensive matter. Every municipal council and every urban area council may make by-laws as to buildings and sanitation.

1.2.7. The Local Government Act (Cap. 265)


The Local Government Act  has provisions for the making of by-laws in respect of suppression of nuisances, imposing fees for any license or permit issued in respect of trade or charges for any services. Local authorities, whose functions have since been taken over by County Governments, are given power to control or prohibit all developments which, by reason of smoke, fumes, chemicals, gases, dust, smell, noise, vibration or other cause, may be or become a source of danger, discomfort or annoyance to the neighbourhoods, and to prescribe the conditions subject to which such developments shall be carried on.

 

1.2.8. The Physical Planning Act, 1996


This Act provides for the preparation and implementation of Physical Development Plans for any development or infrastructure. It establishes the responsibility for the physical planning at various levels of Government in order to remove uncertainty regarding the responsibility for regional planning.

It provides for a hierarchy of plans in which guidelines are laid down for the future physical development of areas referred to in a specific plan. The intention is that the Three-Tier Order Plans, the National Development Plan, Regional Development Plan, and the Local Physical Development Plan should concentrate on broad policy issues.

The Act also promotes public participation in the preparation of plans and requires that in preparation of plans, proper consideration be given to the potential for socio-economic development needs of the population, the existing planning and future transport needs, the physical factors which may influence orderly development in general and urbanization in particular, and the possible influence of future development upon natural environment.

Part V section 30 of the Physical Planning Act states that no person shall carry out development within an area of local authority without a development permission granted by the respective local authority. The Physical Planning Act has provisions to control development and use of land in particular areas, especially where a project may involve subdivisions or amalgamation of land parcels, or located in an area otherwise reserved for other uses. The Act grants power to the local authorities to consider and approve all Development Applications and grant all Development Permission.

1.2.9. Water Quality Regulations


Water Quality Regulations apply to water used for domestic, industrial, agricultural, and recreational purposes; water used for fisheries and wildlife purposes, and water used for any other purposes. Different standards apply to different modes of usage.

These regulations provide for the protection of lakes, rivers, streams, springs, wells and other water sources. The objective of the regulations is to protect human health and the environment. Effective enforcement of the Water Quality Regulations leads to a marked reduction of water-borne diseases and hence a reduction in the health budget.

The regulations also provide guidelines and standards for the discharge of poisons, toxins, noxious, radioactive waste or other pollutants including petroleum products into the aquatic environment in line with the Third Schedule of the regulations. The regulations have standards for discharge of effluent into the sewer and aquatic environment. While it is the responsibility of the sewerage service providers to regulate discharges into sewer lines based on the given specifications, NEMA regulates discharge of all effluent into the aquatic environment.

Everyone is therefore required to refrain from any actions, which directly or indirectly cause water pollution, whether or not the water resource was polluted before the enactment of the Environmental Management and Coordination Act (EMCA) in 1999. It is an offence to contravene the provisions of these regulations with a fine not exceeding five hundred thousand shillings (Kes. 500,000.00).

1.2.10. Waste Management Regulations


The Minister for Environment and Natural Resources gazetted these regulations in 2006. These Regulations are to be cited as the Environmental Management and Coordination (Waste Management) Regulations, 2006. Waste Management Regulations are meant to streamline the handling, transportation and disposal of various types of waste. The aim of the Waste Management Regulations is to protect human health and the environment. Currently, different types of waste are dumped haphazardly posing serious environmental and health concerns. The regulations place emphasis on waste minimization, cleaner production and segregation of waste at source.

A proponent of a project must observe the guidelines as set out in the Environmental Management Plan as well as the recommendation provided for mitigation /minimization /avoidance of adverse impacts arising from the Project activities.

 

1.2.11. Energy Act, 2006


In 2006, the Energy Act No. 12 of 2006 was enacted. This led to the transformation of the then Electricity Regulatory Board to the Energy Regulatory Commission (ERC) to also regulate petroleum and renewable energy sectors in addition to electricity. The Act states in Section 5(a)(ii) that the objects and functions of ERC include regulating the importation, exportation, transportation, refining, storage and sale of petroleum and petroleum products. Accordingly one of the functions of the ERC is the licensing of petroleum import, export, transport, storage, refining and sale.

Construction Permits are also to be issued by ERC for all petroleum related facilities in order to check proliferation of substandard sites. All petroleum operators are required to comply with provisions for Environment Health and Safety. Petroleum products should also meet the relevant Kenya Standards.

1.2.12. Electricity Power Act No. 11 of 1997


The Electric Power Act No. 11 enacted in 1997 deals with generation, transmission, distribution, supply and use of electrical energy as well as the legal basis for establishing the systems associated with these purposes. In this respect, the following environmental issues are to be considered before approval is granted:

·         The need to protect and manage the environment, and conserve natural resources.
·         The ability to operate in a manner designated to protect the health and safety of the project employees, the local and other potentially affected communities.

Under Schedule 3 of the Electric Power {licensing) Regulations 2003, it is mandatory to comply with all safety, health and environmental laws. Moreover, schedule 2 (regulation 9) of the Electric Power (licensing) Regulations 2003 stipulates that licensing and authorization to generate and transmit electrical power must be supported by the following documents which are approved by NEMA. Environmental Impact Assessment Report (EIA) or Initial Environmental Audit Report (IEA).

1.2.13. Way Leave Act


The areas zoned for communication lines, sewer lines, power lines, water pipes etc are known as WAY LEAVES. The Way Leave Act prohibits development of any kind in these designated areas. Thus any developer is bound by this Act to see to it that no development takes place in these areas.

CONCLUSION

We trust that the above presentation on environmental policies and legal frameworks at a glance will be useful in your decision making processes. However, should you have any further queries regarding issues arising herein, please do not hesitate to contact us at info@stralexgroup.co.ke or on + 254 715 310 677 for clarification.


Prepared for Strategic Legal Solutions Group Limited, by:


Teddy Okello, through Centre for Environmental Law & Policy (a participating consultancy firm in the SLS Group of consultancies). 

Wednesday, 2 September 2015

IMPLICATIONS OF THE CONSTITUTION OF KENYA OF 2010 ON ENVIRONMENTAL GOVERNANCE, RIGHTS AND OBLIGATIONS

Kenya promulgated its new constitution in the year 2010, and to many, this constitution set off a new dawn by resorting to manage and/or address the various historical injustices and issues that had risen since time immemorial. 

It also brought to it various amendments and improvements to the 1969 Constitution.  It simplified the text in order to enhance comprehension of its provisions. This is because it is the Supreme law of the Republic that binds all persons and all State organs at both levels of government, echoed in Article 2(1) of the Constitution. 

The Constitution covers a multitude of sectors and aspects of human existence in Kenya as well as our relations with the international community. 

This article is however limited to focus on provisions relating to the environment, which is an important concern in not only Kenya, but also the world at large. 

Environmental Rights 

The Constitution expressly provides in Chapter 4, Article 42 that: Every person has the right to a clean and healthy environment, which includes the right:- 

a) To have the environment protected for the benefit of present and future generations through legislative and other measures; 

b) To have obligations relating to the environment fulfilled. 

Article 42 gives us a glimpse but is not conclusive picture on what constitutes the environment. However, Chapter 5 provides ample information as to what the word “environment” constitutes. It has two categories: Land and Environment and Natural Resources.

Principles of Land Policy The Constitution also enshrines these principles, which are meant to govern the use of land (private, public and community land) in a manner that equitable, efficient, productive and sustainable. 

These principles are: (a) Equitable access to land; (b) Security of land rights; (c) Sustainable and productive management of land resources; (d) Transparent and cost effective administration of land; (e) Sound conservation and protection of ecologically sensitive areas; (f) Elimination of gender discrimination in law, customs and practices related to land and property in land; and (g) Encouragement of communities to settle land disputes through recognized local community initiatives consistent with the Constitution. 

MANAGEMENT OF LAND 

The overall body responsible with matters land is the National Land Commission (NLC).

Its functions are:

 (a) To manage public land on behalf of the national and county governments; 
 (b) To recommend a national land policy to the national government; 
 (c) To advise the national government on comprehensive landholding by non-citizens;
 (d) To conduct research related to land and the use of natural resources and make recommendations to appropriate authorities; 
 (e) To initiate investigations, on its own initiative or on a complaint, into present or historical land injustices and recommend appropriate redress; 
 (f) To encourage the application of traditional dispute resolution mechanisms in land conflicts; 
 (g) To assess tax on land and premiums on immovable property in any area designated by law; 
 (h) To monitor and have oversight responsibilities over land use planning throughout the country; and 
 (i) All other functions prescribed by national legislation. 

Role of the State 

The State has obligations on pertaining to environment and natural resources. 

In this regard, Article 69 provides that the State is to ensure:

(a) Sustainable exploitation, utilisation, management and conservation of the environment and natural resources, and ensure the equitable sharing of the accruing benefits; 

(b) Work to achieve and maintain a tree cover of at least ten per cent of the land area of Kenya; 

(c) Protect and enhance intellectual property in, and indigenous knowledge of, biodiversity and the genetic resources of the communities; 

(d) Encourage public participation in the management, protection and conservation of the environment; 

(e) Protect genetic resources and biological diversity;

(f) Establish systems of environmental impact assessment, environmental audit and monitoring of the environment; 

(g) Eliminate processes and activities that are likely to endanger the environment; and 

(h) Utilise the environment and natural resources for the benefit of the people of Kenya. 

REDRESS FOR VIOLATIONS OF ENVIRONMENTAL RIGHTS 

Every person has the duty to not only cooperate with State organs in the protection and conservation of the environment, but also to ensure ecologically sustainable development and use of natural resources. As such, if it is alleged that the right protected under Article 42 above mentioned has been, or is likely to be, denied, violated, infringed or threatened, the person may apply to a court for redress in addition to any other legal remedies available in respect to the same matter. The Constitution thus gives locus standi to every person who has reason to believe that right protected under Article 42 has been, or is likely to be, denied, violated, infringed or threatened. 

Once an application has been made, the Court may either make any order or give any directions, it considers appropriate:

(a) To prevent, stop or discontinue any act or omission that is harmful to the environment; 

(b) To compel any public officer to take measures to prevent or discontinue any act or omission that is harmful to the environment; or

(c) To provide compensation for any victim of a violation of the right to a clean and healthy environment. 

AGREEMENTS RELATING TO NATURAL RESOURCES 

It is important to note that any agreements relating to natural resources is subject to ratification by Parliament if: 

(a) It involves the grant of a right or concession by or on behalf of any person, including the national government, to another person for the exploitation of any natural resource of Kenya; and 

(b) It is entered into on or after the effective date. These agreements will be governed by legislation enacted by Parliament, which is to provide for the classes of transactions subject to ratification as above mentioned and enact legislation to give full effect to the provisions relating to environment and natural resources, pursuant to Article 71 (2) and 72 of the Constitution. We trust the above brief shed some light on IMPLICATIONS of the Constitution of Kenya of 2010 on environmental governance, rights and obligations. Nonetheless, should you require any clarification on the matters canvassed herein-above, please contact us. 

For: STRATEGIC LEGAL SOLUTIONS GROUP 


Teddy Okello, & Centre for Environmental Law – a participating legal consultancy firm in the SLS Group of Consultancies. 
info@stralexgroup.com

Thursday, 19 March 2015

CAPITAL GAINS TAX AND HOW IT AFFECT LAND TRANSFER TRANSACTIONS IN KENYA

The Finance Act CAP 16 of 2014 was assented by the president on September 2014; section 23 of the said Act has amended the Eighth Schedule of the Income Tax Act CAP 470 to require that the sale of property be subjected to Capital gains tax. The tax which was suspended in 1985 has now been re-introduced and was effective from 1st January 2015; the tax is 5% of the net gain from the transfer of property (Section 3(2)f of the Income Tax Act). Capital Gains Tax is a tax chargeable on the whole of a gain which accrues to a company or an individual on or after 1st January, 2015 on the transfer of property situated in Kenya, whether or not the property was acquired before 1st January, 2015 . The net gain is calculated as the excess of the transfer value over the adjusted cost of the property that is being transferred. The Transfer Value provided for in section 7(1) of the Income Tax Act is the amount or value of consideration or compensation for transfer of the property less incidental costs on such transfer. The Adjusted Cost as stated in the Income Tax act section 8(1) is the sum of the cost of acquisition or construction of the property; expenditure for enhancement of value and/or preservation of the property; cost of defending title or right over property, if any; and the incidental costs of acquiring the property . The adjusted cost shall be reduced by any amounts that have been previously allowed as deductions under Section 15(2) of the Income Tax Act. That is: Capital gains Tax= (Transfer Value – Adjusted Cost) x 5% The tax is paid by the person who transfers the property, the transferor. It can be a legal person or corporate body. A transfer takes place where a property is sold, exchanged, conveyed or disposed of in any manner (including by way of gift) or on the occasion of loss, destruction or extinction of property whether or not compensation is received or on the abandonment, surrender, cancellation or forfeiture of, or the expiration of rights to property . It is considered a final tax and cannot be offset against other income taxes. Where the transfer value cannot be ascertained, the market value is used. Incidental costs are deductible in determining the transfer value of property. These costs include: a) stamp duty; b) legal fees; c) advertising cost; and d) any costs of the acquisition or transfer of property which consist of expenditure wholly and exclusively incurred by the person acquiring the property or the transferor for the purposes of the transfer. Transfers of property as provided by the Eighth Schedule paragraph 6(2) of the Income Tax Act are not considered transfers for the purpose of CGT. These includes: a) transfer through inheritance; b) transfer of property as security for a debt; c) issuance by a company of its own shares or debentures; d) transfer of an asset between spouses or former spouses, as part of a divorce settlement or bona fide separation agreement . Effects if Reintroduction of the Capital Gains Tax 1. The reintroduction of the Capital Gains Tax will increase the cost of land transactions because most investors and land owners and developers will try to pass on the costs to buyers. The process of paying this additional tax will add up to the already strenuous work of transfer of land transaction. 2. The Finance Act does not specifically provide guidelines on how the CGT relating to the transfer of property shall be paid. It is expected that the CGT will be payable in the same manner as the stamp duty such that, evidence of payment of CGT may be required for the transfer of property to be registered . Although KRA has not outlined the procedure that will be applied the Capital gains it says that plans are underway to ease the process of payment of CGT by developing a module within the iTax system that will allow taxpayers to make electronic declarations. 3. Raising tax rates on high income individuals dissuades them from doing productive things – that is to say, it causes them to cut back on working and investing . 4. It may lower Kenya’s appeal as an investment destination but this is debatable since Kenya’s CGT rate is among the lowest in Africa compared to some countries like Tanzania which charges 20% Capital Gain Tax and Uganda which charges 30%. 5. Concerns have been raised that the new tax is likely to push up the cost of housing, and that it could be difficult to administer. “The net effect will be an increase in property prices as sellers look to pass on the tax to buyers. This may result in an adjustment in the sector, particularly for individuals or small developers,” said Timothy Kamau, the head of investor relations at Home Afrika, a NSE-listed real estate company . Recent debates have suggested that the Capital Gains Tax may encourage people to hold property for longer periods and to promote better capital allocation. However inventory is not taxed: after buying land or property for your business premises and selling it after one year, it will not be taxed . This is because inventory is not considered a capital asset. Those whose land is compulsorily acquired by the State will be exempt from the tax . Taxpayers will also have to review transactions involving the transfer of property where the transaction is expected to take place on or after 1 January 2015 . The effect it will have on the real estate sector will get clear when the modalities of how the tax will be administered are released and even clearer when the same is implemented. But generally speaking, this is one additional hurdle and complication in home ownership and everyone will be affected directly or indirectly. And since the government will now get more from the industry, the cost of the industry is more likely to increase than decrease, for the simple reason that someone has to bear the additional cost. Taxing the income from capital income has the potential to reduce savings and investment incentives as well as being a disincentive to entrepreneurship. This dampens the nation's entrepreneur spirit as well as long term prospects for increased productivity and economic growth . Banks and other financial institution may exercise more caution before taking land as security for loans because of the uncertainty and controversy surrounding the reintroduction of the capital gains tax. The Income Tax of 2010 section 72D states that where any amount of tax remains unpaid after the due date a penalty of twenty percent shall immediately become due and payable. On the other hand the Kenya Revenue Authority provides that non payment where no deduction is made could attract a penalty of up to 200% or a fine or imprisonment but where a declaration is made the penalties are 20% and 2% interest per month until the amount is paid in full. In conclusion the Capital Gain Tax is only 5% at the moment and has not been fully implemented. It is therefore difficult to measure the effect it will have on land transfer transactions in the country. However, it is clear that if this percentage is raised the government risk losing income whether as stamp duty or registration costs associated with property transactions because it has real prospects of making Kenya unattractive to investors. For further clarification on tax issues, please contact us. Christine GITONGA For: Taxlex Consulting Group – a participating consultancy firm in the SLS Group of consultancies

Friday, 10 October 2014

A BRIEF ON PLAGIARISM AND COPYRIGHT INFRINGEMENT

Plagiarism has been said to involve the use of another’s work without attribution, as if it were one’s own original work. A more detailed definition has been given as, ‘the deliberate or reckless representation of another’s words, thoughts or ideas as one’s own without attribution in connection with submission of academic work, whether graded or otherwise.’ What is key in both definitions is the use of another’s work and the lack of attribution. Plagiarism appears to raise an ethical issue as opposed to a legal one with educational institutions being so averse to it that it has resulted in harsh disciplinary measures being taken against those found to have engaged in it. Academic institutions in dealing with this have not spared even professors. For instance, Marks Chabedi, a professor, plagiarized Kimberly Lanegran’s work and submitted it as his own work. Upon discovery, he was fired from his professorship and his Ph.D. was revoked. This is just one example of the adverse impact plagiarism can have on a person’s reputation. Unfortunately it has become the norm rather than the exception. Noting that plagiarism involves the use of another’s work, it is important to distinguish it from copyright infringement. This is because copyright is the legal term used to describe the right that creators have over their literary and artistic works which include books, music, paintings among others. The Kenya Copyright Act provides for instances where copyright infringement is said to arise. It is important to note that ‘a copyright shall be infringed by a person who, without the licence of the owner of the copyright- (a) Does, or causes to be done, an act the doing of which is controlled by the copyright; or (b) Imports, or causes to be imported, otherwise than for his own private or domestic use, an article which he knows to be an infringing copy.’ When it comes to copyright infringement, since it is a right that is protected under statute, a copyright holder can sue for its breach. An example of this was in the Kenyan case of JOHN BONIFACE MAINA v SAFARICOM LIMITED [2013] eKLR in which the Court found that the plaintiff had copyright to his recording which the defendant was offering to the public for a profit. It therefore granted him an ANTON PILLER ORDERS to ensure that his statutory rights of copyright were salvaged at that point of trial since it must preserve vital evidence necessary during trial. In view of the above, we see that the type of works that are capable of being plagiarized are also capable of being protected by copyright and hence can be infringed. Despite this similarity some few differences may be noted between the two. Firstly, for there to be copyright infringement the plaintiff must illustrate that their work is protected by copyright. This requirement does not attach to plagiarism. Secondly, in respect of copyright, if a person has permission to use the work then he cannot be liable for copyright infringement. With plagiarism, the only consideration is whether or not there is an acknowledgement of the author. Therefore, a person may have permission to use another’s work but if they do not acknowledge the author are present it as their own idea then one is liable for plagiarism. Thirdly, with copyright infringement a person has recourse to legal remedies but this is not the case with plagiarism. Lastly, it has been said that whereas copyright infringement is a construct of the law, plagiarism is a construct of ethics. Feel free to contact us at intellectualpropertyeastafrica@gmail.com for more information or guidance on Copyright and other forms of intellectual property. FOR: INTELLECTUAL PROPERTY EAST AFRICA LLP

Tuesday, 7 October 2014

PATENTABILITY TEST IN KENYA

The World Intellectual Property Organization (WIPO) has defined a Patent as an exclusive right granted for an invention. A further explanation has been given that a Patent provides the Patent Owner with the right to decide how or whether the invention can be used by others and in exchange, the Patent Owner avails technical information about the invention to the public. The Industrial Property Act Chapter 509 of the Laws of Kenya grants this right for a period of TWENTY (20) YEARS from the filing date of the application. This then begs the question, what must one prove to attain these rights over their invention? The first issue that needs to be determined is what criteria are to be used for something to be considered to be an invention under our laws. This criterion is found under Section 21 (1) of the Industrial Property Act which defines it as a solution to a specific problem in the field of technology. Despite this definition, we find that there are things that fall within this definition but which the law does not consider to be inventions. These include discoveries, scientific theories, mathematical methods, schemes, rules or methods for doing for doing business, performing purely mental acts or playing games, methods for treatment of the human or animal body through surgery or therapy among others. Having established what may be considered to be an invention, we now then interrogate inventions that are patentable and those that are not. It is important to establish this from the onset as a guideline to anyone who wishes to patent their invention. Patentable inventions are: - inventions that are new; - involve an inventive step; and - are industrially applicable or are a new use. On the other hand the following inventions cannot be patented: - plant varieties as provided for in the Seeds and Plant Varieties Act; and - inventions that are contrary to public order, morality, public health among others. PATENTABILITY TEST This will be looked on the basis of the patentable inventions. The first to be considered is the NOVELTY TEST which is the consideration of whether or not an invention is new. An invention is thus considered to be new if it is not anticipated by prior art. What the law considers as PRIOR ART is everything that is made available to the public anywhere in the world by means written or oral disclosure, use, exhibition or any other non-written means. The next is the INVENTIVE STEP which involves attempting to determine whether a given invention is obvious to a person skilled in the art having regard to the state of the art at the filing of the relevant patent application. In this regard, a person skilled in the art is presumed to be a skilled practitioner in the relevant field of technology, who is possessed of average knowledge and ability and is aware of what was common knowledge in the art at the relevant date. The final step is that of INDUSTRIAL APPLICABILITY. The Act provides that an invention is considered industrially applicable if it can be used in any kind of industry, including agriculture, medicine, fishery and other services. It is therefore important for a person who wishes to patent their invention to ensure that it meets the laid out criteria. Signed: For: Intellectual Property East Africa LLP