The cost of bank services is set to go up at the end of this month, when lenders effect a 10 per cent excise duty on transactions. The bankers have got an extension to start levying the tax on August 1, from the previous effective date of June 18, to allow for time to adjust their operating systems. The 10 per cent excise tax will apply on all financial services, with exception of interest charges. Commercial banks are also required by law to notify members of the public of any price changes 30 days before they take effect, which made the extension necessary. We request for a change to the effective date of the excise duty provisions in both the Finance Act 2012 and the Finance Bill 2013 from 9th January 2013 and 18th June 2013, respectively to 1st August 2013,” said industry lobby, the Kenya Bankers Association (KBA), during a presentation to Parliament’s Finance Committee on Tuesday. The bankers said they had shared the proposal of extending the date to August with the Kenya Revenue Authority and the Central Bank who were both in support. KBA had last week in a public statement notified the public of possible increase in service fees with the implementation of the new tax. During their presentation to the finance committee the bankers, who made a total of Sh107 billion in pre-tax profit last year, said they were not willing to absorb the liability as it was a consumer tax meant to be passed on. “KBA on behalf of its member banks therefore wishes to notify bank customers and the general public that the excise duty on all such service fees will be payable to the Kenya Revenue Authority,” read the statement issued last week. The banks had delayed implementation of the excise duty as they sought clarification on what fees and commission were to be charged and extension of the time frame to ensure they modified their IT systems and complied with the consumer protection rules. The government addressed the bankers’ concerns at the 2013/14 budget by defining the fees and commissions liable to tax and changing the effective date to June 18. While introducing the tax measure, the Treasury had said it aimed at raising Sh4.5 billion. Last year banks earned Sh32.8 billion from operational fees and commissions, which include ATM withdrawal fee, over-the-counter withdrawal fee, ATM application fees, statement collection fees, standing order commission and mobile money service commissions. Analyst said that the changes were likely to cause consumers to consider changing their banking habits especially corporate clients who had to keep their administrative costs low.
Posted on: Wed, 17 Jul 2013 05:01:40 +0000
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