Government  to impose tax on  education services

Government  to impose tax on  education services

Government  to impose tax on  education services

The National Treasury has proposed introducing taxes on some services offered by schools, which the government observes are not directly related to education.

In its Medium-Term Revenue Strategy (MRTS) for the Financial Year 2024/25 to the Financial Year 2026/27, the Treasury cited the fact that tax exemptions on education services across various schools are not uniform due to differences in fees charged and services provided.

The National Treasury has proposed taxing some school-provided services that the government believes are unrelated to education. The Treasury underlined the fact that tax exemptions on education services across  various institutions are not standard due to disparities in fees collected and  services offered in its Medium-Term Revenue Strategy (MRTS) for the Fiscal Years 2024/25 to 2026/27.

Treasury also stated that the VAT exemption on education, which includes all services offered by schools, is unfair. Swimming was especially mentioned by the Njuguna Ndung’u-led ministry, who noted that when offered outside of school, the service is valuable.”To remove this discrimination, there is a need to impose VAT on the additional benefits,” the Treasury added.

The tax is one of several measures put in place by the government to close tax evasion loopholes and improve taxpayer compliance.Treasury Cabinet Secretary Njuguna Ndung’u went on to say that the education tax, as well as other new taxes established by the MRTS, would aid the government in carrying out its development plan.

“In order to make education accessible to all learners, education services in Kenya are exempt from Value Added Tax.” However, because of variances in prices charged and services delivered, the advantage of the exemption is not uniform among all learners,” the CS stated the need for the tax on education services.”In this regard, the Government will investigate the introduction of VAT on services provided by schools but not directly related to education,” according to the MRTS.The Treasury also stated that the proper threshold for the services will be investigated.The MRTS has also recommended a general rate of taxation on insurance services.

The Treasury has also recommended removing the threshold for applying the VAT input tax apportionment methodology through the MRTS.