The GOVT extends to tax non-educational activities in schools.
According to the government’s decision, the National Treasury has proposed levying taxes on certain school services that are not directly related to education. This recommendation is stated in the Medium-Term Revenue Strategy (MRTS) for Fiscal Years 2024-25 through 2026-27.
The justification for this suggestion stems from the uneven distribution of tax exemptions on educational services between institutions due to differences in fees and the type of services supplied.
To address this disparity, the Treasury has stated that these supplemental benefits should be subject to Value Added Tax (VAT). Notably, the Ministry, led by Njuguna Ndung’u, emphasized swimming services, emphasizing its importance when supplied outside of the traditional school curriculum.
According to the Treasury, the purpose here is to remove this disparity by subjecting more benefits to VAT. This taxation is one of the government’s measures for reducing tax exemptions and increasing taxpayer compliance.
Treasury Cabinet Secretary Njuguna Ndung’u went on to say that the income collected by this school tax, as well as other newly implemented levies mentioned in the MRTS, will help the government forward its development goal. The memo also mentions a study of the threshold of these services.
To maintain accessibility for all learners, the Cabinet Secretary confirmed that education services in Kenya are now exempt from Value Added Tax. However, due to variances in rates and services, this exemption is not implemented consistently. As a result, the government is considering imposing VAT on services supplied by schools that are not directly related to education.
Furthermore, as outlined in the document, the Ministry of Finance proposes a flat-rate tax on insurance services, and the Treasury intends to reduce the threshold for executing the VAT input tax allocation formula.