Latest data compiled by Kenya National Bureau of Statistics (KNBS) shows
that revenue from financial transactions dipped to their lowest level
in three years. GRAPHIC | NMG
Summary
- Latest data compiled by Kenya National Bureau of Statistics (KNBS) shows that the revenue dipped to their lowest level in three years.
- Receipts fell 26.3pc to Sh10bn as lenders moved transactions to digital platforms
- Revenue from this category had been on the rise from Sh7.22 billion before touching a high of Sh13.7 billion in 2017.
Revenue collected from financial transactions dipped 26.3
percent to Sh10.1 billion from Sh13.7 billion in 2017, despite a rise in
taxes in the last quarter of the year.
Latest data
compiled by Kenya National Bureau of Statistics (KNBS) shows that the
revenue dipped to their lowest level in three years.
Revenue from this category had been on the rise from Sh7.22 billion before touching a high of Sh13.7 billion in 2017.
The
dip defied the Finance Act 2018 that was passed September last year,
doubling the Excise Duty on fees charged for mobile money transfer
services from 10 to 20 percent. Telephone and internet data services
also had their tax jump to 15 percent.
The government was expecting to raise Sh20.2 billion from the doubled 20 percent excise tax on fees levied on banking services.
The transactions that attract fees and charges include obtaining account statements, ATM cash withdrawals and cheque clearance.
Additional charges
This effectively saw bank customers incurr additional charges on ATM withdrawals by Sh11 up to a maximum of Sh66.
Besides banks, the higher excise tax was deducted by other financial institutions, including insurers and fund managers.
The taxman, however, in the three months from September to
December, did not realise the expected gain from the new levies, despite
increase in the number of financial activities.
KNBS
data shows, it is the traditional areas such as excise revenue collected
from domestically manufactured commodities and services that grew by
12.6 percent to Sh93.3 billion in 2018.
“However,
excise revenue from cigarettes and financial transactions categories
declined by 1.9 percent and 26.3 percent, respectively,” notes the
survey.
The performance underlines the mixed bag of
fortunes that government encountered with the new tax measures that were
introduced in a supplementary budget passed through a chaotic August
House.
The drop in tax on financial transactions was despite the number
of ATM transactions rising from 141.9 million in 2017 to 167.6 million
in 2018, according to data from Central Bank of Kenya (CBK).
The
number of deals settled through mobile payments such as M-Pesa, which
have evolved from person-to-person cash transfer services to e-commerce
platforms, also increased from 139.9 million transactions in 2017 to
155.8 million last year.
Surpassed targets
Kenya Revenue Authority (KRA) will, however, feel comfortable
after taxes from airtime consumption surpassed targets, premised on
Kenyans’ rising appetite for voice and data usage. It registered the
highest growth at 63 percent to hit Sh26.3 billion.
The airtime taxes have primed the Treasury to surpass its performance targets for 2018/19.
Total
domestic traffic increased by 26.8 percent from 44.1 billion minutes in
2017 to 55.9 billion minutes in 2018, according to KNBS data. Last
year, mobile phone penetration was 103.45 per 100 inhabitants as a
result of subscribers having more than one subscription, according to
data from Communications Authority of Kenya.
The mixed tax performance results piles pressure on KRA to enhance its ability to meet targets.
The
taxman has in recent years consistently missed the ambitious revenue
targets set by the Treasury. It missed collection targets by Sh53
billion in the half year ended December 2018.
Receipts
from taxes, levies, earnings from investments, rental income and fines –
technically referred to as ordinary revenue – amounted to Sh722.28
billion in the first six months of the financial year against a target
of Sh774.99 billion, latest Treasury statistics show.
The
ordinary revenues in the July-December 2018 period were, however,
Sh65.39 billion or 9.95 percent more than Sh656.90 billion in the
corresponding period a year earlier, which was clouded by a bruising
presidential poll contest.
Digital platforms
The taxman says it is targeting tax collections from economic activities carried out over digital platforms.
“Most
transactions are moving towards digital platform and the current
legislation doesn’t exclude this but needs clarification on how those
transactions can be subjected to tax. We want to ensure we capture this
sector and expand the tax base,” says Mr Njiraini.
No comments :
Post a Comment