Thursday, June 6, 2024 - National Assembly Finance Committee Chairperson Kuria Kimani sought to clarify the proposed 16 per cent VAT on financial services as he defended the punitive Finance Bill, 2024.
During a meeting with the Kenya Bankers
Association (KBA), the MP stated that the VAT would be imposed on charges
imposed by financial institutions for various transactions.
He stated that the amendment was not targeting
the total amount in transactions as had been perceived by the public and
other stakeholders.
"Committee Chairperson Hon Kuria Kimani
has however clarified that the provision on Clause 34(b)(i) does not intend to
impose VAT on the value of the transaction rather than on fees charged on the
transaction," read the statement by Parliament.
In the meeting, banks expressed concern over
introducing the VAT on financial services.
According to KBA, the tax was targeting
telegraphic money transfers, foreign exchange transactions, issuance of credit
and debit cards, and cheque handling among others.
The Association explained that the
introduction of the tax would be consequential in the banking sector given that
they would be forced to increase charges.
KBA added that the increase would ultimately
limit most Kenyans from accessing formal financial services.
"The increased total taxation of
financial services under the Bill would reach 40% from the current 15%,
significantly hampering accessibility and affordability of banking services
among low-income earners and small businesses," the association opined.
The Finance Committee is currently undertaking
a public participation exercise over the proposed Finance Bill 2014.
Already various stakeholders have opposed tax
proposals in the bill owing to its implications for the job market and for
Kenyans.
The Kenyan DAILY POST
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