The government would tax these education services, Ndung’u
The National Treasury is mulling over whether or not to impose taxes on particular school services that are not directly associated with education. They highlighted in their Medium-Term Revenue Strategy (MRTS) for the Fiscal Years 2024/25 to 2026/27 that tax exemptions on education services vary due to differences in fees and services among schools. This was included in their document for the Fiscal Years 2024/25 to 2026/27.
The Treasury Department noted that the widespread exemption from VAT on education services, particularly those supplied by schools, contributes to an uneven distribution of wealth. They specifically mentioned services like swimming, which, when offered outside of a school setting, are subject to value-added tax.
By applying a value-added tax (VAT) to these additional services, as this tax plan proposes to do, the intention is to help close the current revenue shortfall. It is a part of the government’s effort to close tax loopholes and improve taxpayer compliance with the law.
Treasury Cabinet Secretary Njuguna Ndung’u emphasized that the government will be able to implement its development plan with the assistance of revenue generated from the school tax as well as other new levies imposed by the MRTS.
In addition, the paper states that an investigation would be conducted into the threshold for certain services; this suggests that the proposed tax could not be applicable to all services associated to schools.
In addition, the Ministry of Finance has suggested taxing insurance services at a flat rate and doing away with the threshold for applying the VAT input tax apportionment calculation. Both of these ideas are now under consideration.