President Ruto defends decision to remove taxes on aircraft, helicopter parts

The proposal to scrap three taxes on aircraft and parts in the Finance Bill, 2023 is to protect jobs in the aeronautical industry, President William Ruto said Sunday, dismissing speculation the proposal seeks to benefit Kenyans in the upper class.

In the bill, President Ruto’s administration proposes to exempt importers of aircraft, especially choppers, from paying the 16 per cent Valued Added Tax (VAT) while scrapping the 3.5 per cent import declaration fee (IDF) and the two per cent Railway Development Levy (RDL).

The move has elicited debate from a majority of middle and lower-class Kenyans who are feeling the heat of additional taxes to fund the government’s pension, healthcare and housing plans.

Ruto defended the decision during a joint interview with media houses at State House, Nairobi, saying the taxes imposed on helicopter imports in the Finance Act 2020 had hurt professionals in the local aircraft industry such as engineers.

“I saw many people saying this is about the president and his friends who have helicopters. But this was because Wilson Airport I think is the third or fourth busiest airport in Africa, and its main work is repair and maintenance. We have a very big ecosystem of engineers and people who work in the aeronautical field who had shifted base to Tanzania and Uganda because we imposed these taxes,” the president told journalists.

“We lost business and almost shut down Wilson Airport. The same industry players at Wilson came to plead with me and it was purely because we are protesting jobs and our business.” 

Before July 2021, Kenyans did not pay tax upon the purchase of certain types of helicopters, aeroplanes and aircraft gear as well as parts such as tyres. This also applied to those seeking to lease or hire helicopters.

But in the Finance Act 2020, persons seeking to hire or buy aeroplanes of an unladen weight not exceeding or exceeding 2,000 kilogrammes started paying VAT as then President Uhuru Kenyatta’s administration sought to collect an additional Ksh.38.9 billion from wealthy individuals and industries.

The government also introduced a 25 per cent import duty on the importation of helicopters, pushing up the cost of buying these aircraft.

At the moment, only aircraft parts such as propellers, balloons, gliders, hang gliders and other non-powered aircraft are exempt from paying the 16 per cent VAT when brought into the country.

According to the 2023 Economic Survey, the total number of aircraft registered last year dropped by 1.5 per cent to 726 compared to 2021.