Cost of banking to go up as banks implement a 10% tax charge

Posted on July 12, 2013

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Habil Olaka, CEO Kenya Bankers Association

The cost of banking in Kenya has largely remained an area less understood. This I believe has been occasioned with the casual manner in which most of us deal with banks. More often than not, it is a case of transaction in and out. What can be summed up as A deposit-withdrawal arrangement.

Not most of us are keen to find out how much banks charge us to withdraw our hard earned cash over the counter, through ATM or for transaction on cards. The convenience, I’m convinced makes the all important question of just how much it costs to do business with banks a neither here nor there situation.

Even when applying for loans, the rush to get done with the paper work so that the money can be wired shows just how much disdain we have towards the cost of banking.

Interesting that even with the unknown cost of transactions, Kenya bankers Association has announce that its members are implementing an excise duty introduced by the Finance bill 2013.

The 10% tax will be charged on fees and commissions on money transfer services and other banking fees. This will however not be applicable on interest. The bottom line of this is that the cost of banking is set to increase in Kenya, marginal as it may be the increase will be there.

This may just be the reason for bank customers to find out from their respective banks the net impact of the 10% that will be payable to the Kenya Revenue Authority.

 

A similar charge had been implemented by mobile phone service providers except Airtel which at one point had zero charges on its service.

For a better understanding, the charges are part of National Treasury’s plan through KRA to raise the much needed revenue to meet the ballooning state expenditure. 

 

 

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