CORPORATE INTELLIGENCE AFRICA ISSUE 0024

BANKING Banking costs to rise as government introduces 10pc tax on bank transactions By K. Mogallo and J.Opiyo Authority and the Central Bank who were both in support of the same. Kenya Bankers Association has already notified the public on a possible increase in service fees when the new charges take effect. During their presentation to the finance committee, the bankers who made a total of Sh107 billion in pre-tax profit last year, said they were not willing to absorb the liability and the charges will be passed on to the consumers. “KBA on behalf of its member banks therefore wishes to notify bank customers and the general public that the excise duty on all such service fees will be payable to the Kenya Revenue Authority,” read the statement by the bankers association. Last year banks earned Sh32.8 billion from operational fees and commissions, which include ATM withdrawal fee, over-the-counter withdrawal fee, ATM application fees, statement collection fees, standing order commission and Turn to page 39 K 36 enyans who hold bank accounts with various banks in the country will now pay a 10 per cent tax on all bank transaction due to the introduction of a 10 per cent excise duty by the government The excise duty on transaction introduced by the Finance Bill 2013 and already effected by the Kenya bankers Association has led to a 10 per cent increase on the banking services. The 10 per cent tax is charged on fees and commissions on money transfer services and other banking fees though not applicable on interest. Following the development, the Kenya Banking Association, chief executive officer Habil Okaka has called on bank customers to find out from their respective banks the net impact of the 10 per cent, which is payable to the Kenya Revenue Authority. Commercial banks are also required by law to notify members of the public of any price changes 30 days before they take effect, which made the extension necessary. The bankers initially got an extension to start levying the tax on August 1, from the previous effective date of June 18, to allow for time to adjust their operating systems. The bankers said they had shared the proposal of extending the date to August with the Kenya Revenue Central Bank of Kenya. THE CORPORATE INTELLIGENCE AFRICA FOR AUTHORITATIVE AND EXTENSIVE BUSINESS INSIGHTS www.corporateintelligenceafrica.net

CORPORATE INTELLIGENCE AFRICA ISSUE 0024 | Page 36