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Thursday, May 6, 2021 – Kenyans are set to get cheaper loans after Treasury CS Ukur Yattani scrapped 20 percent tax imposed on banks.
Yattani made the proposal to drop the excise duty tax in the Finance Bill 2021 he forwarded to Parliament for approval.
The proposal is set to drop credit charges immensely which had been imposed on the banks’ loan facility in 2018 in an attempt to fix the budget deficit.
Banks are set to save as much as Ksh7 billion every year if the proposal is dropped hence easing the pressure on lenders to raise loans.
Since the introduction of the tax, loans rose through the roof affecting banking services such as loans, transfers, over-the-counter withdrawals as well as ATM transactions, and account operating fees.
The high cost of loans has also been blamed for the rise of shylocks and unregulated digital loan applications.
“The first schedule to the Excise Tax Act, 2015 is amended in part three, in the definition of ‘other fees’ by deleting the word ‘fees or commissions’ earned in respect of a loan,” read the proposal in part.
Industry stakeholders and players welcomed the move noting that with the pressure to raise lending rates off, they would be obliged to transfer the benefit to consumers.
“If the tax is removed, then most likely we will pass this to customers. Most banks will reduce the fees charged on loans,” he said.
The Kenyan DAILY POST