This archive report was first published on 23 June 2021.
Kenyan loans are set to become more expensive from July 2021 following a decision by Parliament to retain a proposal to remove fees and commissions earned by financial institutions on loans from exemption from excise duty.
The Kenya Revenue Authority (KRA) is expected to generate over Ksh7 billion annually from taxes on the fees and commissions charged for processing loans.
The proposal was contained in the Finance Bill 2021 and was rejected by the Kenya Bankers Association (KBA) in its submissions to the Finance and Planning Committee.
The committee, led by Homa Bay Woman Representative Gladys Wanga, maintained that the proposed amendment to Part Three of the Interpretation Schedule to the Excise Duty Act was in line with a government policy to reduce tax incentives.
According to the committee, the retention of the excise duty will negate the intended objective of reducing tax expenditure and erode the tax base.
The 20% excise tax was first introduced in 2018 and was responsible for a spike in costs associated with bank services including transfers and account operating fees.
Published on June 23, 2021, by Business Today.
