The government increases taxes for extracurricular activities.

The government increases taxes for extracurricular school activities.

The National Treasury has proposed taxing some school services that aren’t directly related to education, in accordance with the government’s decision. The Medium-Term Revenue Strategy (MRTS) for the Financial Years 2024–25 to 2026–27 includes a thorough explanation of this recommendation.

This suggestion is justified by the uneven distribution of tax exemptions for educational services among various institutions, which is caused by differences in costs and the scope of services provided.

The Treasury has stated that value added tax (VAT) needs to be applied to these supplemental benefits in order to make up for this imbalance. Notably, the Ministry, under the direction of Njuguna Ndung’u, singled out swimming programmes, highlighting the importance of their availability outside of the usual school day.

According to the Treasury, the objective is to eliminate this discrepancy by levying VAT on new benefits. This taxation is one of the government’s tactics for lowering tax exemptions and boosting taxpayer compliance.

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Njuguna Ndung’u, the Treasury Cabinet Secretary, added that the revenue from this school tax and other newly enacted levies described in the MRTS will help the government forward its development objectives. The document also refers to a probe into the threshold of these services.

In order to ensure accessibility for all students, the Cabinet Secretary made it clear that education services in Kenya are now exempt from Value Added Tax. However, due to variations in rates and services, this exemption is not consistently implemented. As a result, the government is considering imposing VAT on school services that are not directly related to education.

In addition, as stated in the document, the Treasury wants to remove the threshold for executing the VAT input tax distribution method, and the Ministry of Finance is proposing a flat-rate tax on insurance services.

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