NYERI, Kenya, Aug 17 – Agriculture and business based Savings and Credit Co-operatives (SACCOs) in Mount Kenya region want the government through their regulatory body to exempt them from paying corporate and excise duty saying that the two taxes are greatly affecting the amount of dividends paid to their members.
The SACCOs say that compelling them to pay the thirty percent corporate tax on their income and a further twenty percent exercise duty is shrinking members dividends and forcing them out of business at this time when their core members who are small-scale businesses and farmers have been affected by COVID-19 regulations.
The co-operatives pay the two taxes to Kenya Revenue Authority. Failure to pay may result to cancellation of their operating licences through the Sacco Societies Regulatory Authority.
Corporate tax is calculated on the income a SACCO makes from any product they offer to members with some paying a sum of three million yearly.
Speaking to the media in Nyeri, many of the co-operatives complained that the two taxes should be phased out or reduced to enable them to offer financial services to low-income business operators who spur the economy.
“We want these taxes removed we serve millions of Kenyans small scale business people why should we be subject of corporate tax like big companies who rake millions of shillings each year” said Wanjii muranya an official of Enea sacco in Nyeri town who serve coffee farmers.
He says that following the introduction of the tax, his SACCO was forced to lower members’ divided from ten percent to nine in order to remain afloat.
“This has forced many members of the SACCO to recant their membership and only operate front office saving accounts.By mare fact that we are not giving high dividends, we have noticed that many people are not buying shares this can easily kill SACCOs hence the need for government to act,” said Wanjii.