Gov’t Extends Tax to Non-educational Activities in Schools

Gov’t Extends Tax to Non-educational Activities in Schools

As per the government’s decision, the National Treasury has put forth a proposal to levy taxes on certain school services that are not directly linked to education. This suggestion is detailed in the Medium-Term Revenue Strategy (MRTS) for the Financial Years 2024–25 to 2026–27.

The rationale behind this proposal is the uneven distribution of tax exemptions on educational services across different institutions, owing to variations in fees and the range of services offered.

To rectify this discrepancy, the Treasury has expressed the need to apply Value Added Tax (VAT) to these supplementary benefits. Notably, the Ministry, led by Njuguna Ndung’u, specifically highlighted swimming services, emphasizing their value when provided outside the regular school curriculum.

The goal here is to eliminate this disparity by subjecting additional benefits to VAT, as stated by the Treasury. This taxation is one of the government’s strategies to reduce tax exemptions and enhance compliance among taxpayers.

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Treasury Cabinet Secretary Njuguna Ndung’u further explained that the revenue generated from this education tax and other newly introduced levies outlined in the MRTS will aid the government in advancing its development agenda. Additionally, the document mentions an investigation into the threshold of these services.

The Cabinet Secretary clarified that currently, education services in Kenya are exempt from Value Added Tax to ensure accessibility for all learners. However, this exemption is not uniformly applied due to differences in fees and services. Consequently, the government is contemplating the introduction of VAT on services provided by schools that are not directly related to education.

Furthermore, the Ministry of Finance is proposing a flat-rate tax on insurance services, and the Treasury aims to eliminate the threshold for implementing the VAT input tax allocation formula, as detailed in the document.

Gov’t Extends Tax to Non-educational Activities in Schools