Let Treasury reverse plan to charge excise duty on loan processing fees

Sky Cake House

Kate Kirui (right), the proprietor of Sky Cake House, removes sweet buns from an oven at her bakery in Eldoret, Uasin Gishu County, on February 10, 2021. There is a need to ensure credit access for small-scale businesses. 

Photo credit: Jared Nyataya | Nation Media Group

What you need to know:

  • Excise duty has traditionally been charged on goods considered to be luxurious or harmful to humans and the environment.
  • Kenya has broken away from this tradition by introducing the duty on services such as telecommunication, money transfer, financial and internet data services. 

The Finance Bill 2021 proposes excise duty on fees or commissions earned in respect of a loan. If adopted, this is likely to increase the cost of accessing credit facilities. It is, moreover, retrogressive and will bring back uncertainty on the scope of interest exempted from excise duty, a gap that had been addressed.

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