‪NCBA Bank CEO John Gachora Attacks Ruto Over New Taxes‬

The proposals effectively reverse the cuts that had been made on money transfer charges in the 2023 Finance Act, a move that was meant to cushion Kenyans from higher costs of transacting cash in a tough economic climate.

In 2023, the tax on airtime, data and bank cash transfers had been cut by five percent, while that on mobile wallet transfers had been increased from 12 percent.

In addition to the excise changes, the National Treasury is also proposing to introduce value added tax (VAT) on financial services, including forex transactions and cheque processing.

Other financial services targeted for VAT, which is levied at 16 percent, include the issuance of securities for money such as bills of exchange, promissory notes, money and postal orders.

Financial institutions will also levy VAT during the issuance of credit and debit cards if the proposals receive the nod of Parliament.

Government’s targets

The measures are part of a wider effort by the government to improve its tax collection performance, which has lagged behind target for the current fiscal year.

Overall, the government is targeting tax collections worth Sh2.94 trillion in the next fiscal year, up from Sh2.62 trillion in the current year. By the end of March, the government had collected total revenue of Sh1.86 trillion, against a pro-rated target of Sh2.13 trillion.

In the current fiscal year, the State’s target from excise duties stands at Sh350 billion, which is expected to go up to Sh400 billion in the 2024/2025 fiscal year.