Cost of sending letters to go up as Posta imposes 16pc tax on service

Posta employee, Nganga Leonard, displays some of the stamps on sale after the commemoration of stamps to mark 50 years at Hotel Intercontinental, Nairobi, on December 10, 2013. The cost of sending letters and small parcels will go up as Posta belatedly moves to implement a 16 per cent tax on postal services in the country. PHOTO | ANN KAMONI  NATION MEDIA GROUP

In Summary

• Last year, the government reviewed the VAT regime in the country as part of a larger initiative by the taxman to increase efficiency and seal revenue leakages. The amendments saw the government scrap exemptions and zero rating on hundreds of goods and services
• The sector has been suffering with the advancement of technology and as Kenyans opt to send messages via other platforms such as SMS and WhatsApp

 

By Nation Reporter
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The cost of sending letters and small parcels will go up as Posta belatedly moves to implement a 16 per cent tax on postal services in the country.

“The Postal Corporation of Kenya hereby notifies all our esteemed customers and the general public that with effect from Monday 3, February 2014, all postal services will attract a Value Added Tax (VAT) charges,” reads its statement in part.

Last year, the government reviewed the VAT regime in the country as part of a larger initiative by the taxman to increase efficiency and seal revenue leakages. The amendments saw the government scrap exemptions and zero rating on hundreds of goods and services.

Previously, postal services such as the supply of postage stamps and rental of post boxes were exempt from VAT. At the moment, PCK charges an annual fee of Sh2,000 and Sh6,000 for rental of individual and corporate post boxes respectively.

The cost of these services is now to set to go up as PCK begins collecting VAT.

Although other firms offering vatable goods and services begun implementing the tax last year, PCK delayed the move as it sought exemptions from the government.

It is now unclear whether the corporation will bear the cost of VAT it ought to have collected since September 2013.

“All along we have been consulting but we don’t have concrete answers yet so we have decided to comply with the law….if the government demands that we pay on behalf of the public, we have no option but to pay,” said PCK manager for corporate communications and public affairs, Mr Gichuki Njeru.

Statistics from the Communications Commission of Kenya (CCK) indicate that the number of letters posted locally fell 5.2 per cent to 16.9 million in the year to September 2013. 

The sector has been suffering with the advancement of technology and as Kenyans opt to send messages via other platforms such as SMS and WhatsApp