Government could impose taxes on educational services.
The National Treasury has suggested levying taxes on a number of school-provided services that the government claims have no clear connection to education.
The Treasury said that the idea is justified since differences in fees and the scope of services supplied in different schools lead to the non-uniformity of tax exemptions on educational services.
This was stated in the Treasury’s Medium-Term Revenue Strategy (MTRS) for the Fiscal Years 2024/25 to 2026/27.
The Treasury also emphasized how unfair it is that all school services, including education, are excluded from Value Added Tax (VAT). The ministry, which is run by Njuguna Ndung’u, particularly used swimming as an example and noted that, when given outside of schools, the service should be taxed.
The Treasury declared, “There is a need to levy VAT on the increased benefits in order to eradicate this prejudice.
The tax is one of the policies the government is implementing to close tax evasion gaps and improve taxpayer compliance.
CS Ndung’u went on to say that the government will be able to carry out its development plan with the aid of the education tax and other new levies suggested in the medium term report.
Treasury stated in the document that the services’ threshold will also be investigated.
Prof. Ndung’u writes in the document, “In this regard, the Government will study the implementation of VAT on services offered by schools but are not directly related to education.
Treasury has also suggested taxing insurance services at a standard rate.
In addition, Treasury has suggested eliminating the cutoff point for using the VAT input tax apportionment formula.
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