Banks urge Parliament to review proposed VAT on financial transactions
File image of Kenya Bankers Association CEO Habil Olaka during a past event.
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The Kenya Bankers Association is calling on the Government and the
National Assembly to reconsider the proposed 16% Value Added Tax on financial
transactions in the Finance Bill 2024.
KBA argues that bank charges are cost recoveries, not direct payments
for goods or services, and therefore should not be subject to VAT.
The new bill proposes VAT on services such as credit and debit card
issuance, money transfers, foreign exchange transactions, and cheque handling.
KBA warns that this will increase banking costs, adversely affecting
low-income individuals and small businesses.
The combined taxation, including existing Excise Duty, could rise to
40%, up from the current 15%.
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