- Tax experts warn of negative economic effects if Kenya introduces VAT on excisable financial services.
- Adding VAT on top of excise duty creates a compounding tax effect, burdening consumers.
- Current 15 percent excise duty on money transfer fees would face an additional 16 percent VAT.
- Total tax impact on these transactions could reach 33.4 percent.
- Difficulty in applying VAT on financial services due to challenges in measuring value add.
- Potential contradiction with government’s financial inclusion agenda.
- Transactional taxes are regressive, affecting lower-income groups more.
- Policymakers should consider adverse effects on financial inclusion efforts.
- Rise of fintech and digital services offers opportunities for financial inclusion and employment.
- Need for a forward-looking approach to embrace technological advancements.
Source: the-star.co.ke
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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