This archive report was first published on 7 December 2019.
On December 7, 2019, the Protective Security Industry Association (PSIA) presented a memorandum to the Kenya Revenue Authority (KRA) urging the government to review the taxation formula for private security companies.
The association's chairman, Cosmas Mutava, argued that the current model has led to high operating costs for the firms. He stated that some clients pay late, yet every month KRA expects them to pay taxes without delay.
“The guarding companies pay the wages and 16 per cent VAT while we wait for the payment. Some customers pay after 30, 45, 60, 90, some even after 120 days,” said Mr. Mutava.
PSIA suggests that VAT should be paid only when the client makes actual payment to the security company. The association also proposes that VAT should not be charged on the gross amount paid by the clients but instead after salary deduction.
“Kenya should borrow a page from the Philippines, particularly Curzon City, where VAT is charged on the difference between the values less the labour cost,” said Mutava.
PSIA also called on the government to allow them to pay corporate taxes instead of VAT, just the way banks, schools, and other corporate bodies do. The association asked for zero rating of security equipment, which currently attracts 16 per cent VAT.
