The National Treasury has proposed introducing taxes on some services offered by schools, which the government observes are not directly related to education.
In its Medium-Term Revenue Strategy (MTRS) for the Fiscal Years 2024/25 to 2026/27, the Treasury asserted that the proposal is warranted because the non-uniformity of tax exemptions on educational services in various schools arises from disparities in both fees and the range of services offered.
The Treasury further highlighted that the exemption of Value Added Tax (VAT) on education, including all school services, results in inequity. The Njuguna Ndung'u led ministry specifically cited the example of swimming, noting that when provided outside school, the service should be subject to taxation.
“To remove this discrimination, there is a need to impose VAT on the additional benefits,” the Treasury stated.
The tax is one of the measures being introduced by the government to seal loopholes and enhance taxpayer compliance.
CS Ndung'u further explained that the education tax and other new taxes proposed in the medium term report will help the government implement its development agenda.
In the document, Treasury said the threshold of the services will also be explored.
“In this respect, the Government will explore the introduction of VAT on services provided by schools but are not directly related to education,” Prof. Ndung'u outlines in the document.
Additionally, Treasury has also proposed taxation of insurance services at a general rate.
Besides that, Treasury has also proposed the removal of the threshold for applying the VAT input tax apportionment formula.
