The National Treasury has cornered wealthy Kenyans who will have to pay more to hire choppers or buy planes in new tax proposals presented by Treasury CS Ukur Yatani on Thursday in the National Assembly.
In the new proposal, tax exemption on aircraft will be scrapped.
Initially, some aircraft operations such as spares and other mechanical gear did not attract any tax during purchase.
While presenting budget estimates for 2020/2021 financial year, Yatani said that anyone seeking to hire or buy an aircraft “of an unladen weight not exceeding or exceeding 2,000kgs will be subject to paying 14 percent in Value Added tax (VAT).”
Unladen weight essentially means the weight of the aircraft when it is not carrying any passenger of goods.
In this proposal, the Treasury will net KSh38.9 billion from this sector where only the wealthy rule.
In Kenya, it will cost you roughly Ksh150,000 – Ksh400,000 to hire a chopper per hour. With Yatani’s proposal, it means that the cost of leasing or hiring a chopper will now go up.
Kenya Association of Air Operators (KAAO), executive secretary Eutychus Waithaka said that the proposed taxes are likely to hurt the aviation sector.
He said that they do not support the reintroduction of taxes.
“We don’t support reintroduction of taxes and duties that were previously waived or exempted for aviation sector. We have been fighting that the sector be exempted from extra taxations as this will impact heavily on our operations,” he told Business Daily.
In 2014, Value Added Tax Act exempted any form of tax on helicopters of an unladen weight not exceeding 2,000 kg” and those exceeding 2000kg.
The exemption saw a spike in the number of new aircraft registered in 2018 by the Kenya Civil Aviation Authority (KCAA). 87 new aircraft were freshly listed.
In total, Kenya has 1,548 privately registered aircraft.
