This archive report was first published on 2 July 2020.
On July 2, 2020, the Kenyan Treasury made a move that has left the aviation industry reeling. In a bid to increase government revenues, the Treasury imposed value-added tax (VAT) and an import declaration fee (IDF) on leasing or hiring certain types of helicopters and aircraft.
The 14 percent VAT and IDF have been met with mixed reactions from auditors and accountants. While some see the move as a necessary step to boost government revenues, others believe it will only exacerbate the industry's struggles during the COVID-19 pandemic.
According to Bowmans Kenya, a law firm that provides tax advisory services, the amendments aim to streamline current exemptions and bring non-essential goods into the sales tax bracket. However, KPMG Kenya, an audit and advisory firm, disagrees, arguing that the levies will negatively impact the aviation industry and defeat the aspirations of establishing Kenya as an aeronautical hub in East Africa.
Initially, all aircraft were exempt from IDF, but now certain types of helicopters and other aircraft are subject to the fee. The proposal has sparked concerns that the industry, already struggling due to the pandemic, will suffer further.
