Update on new VAT rules
On 26th May, I wrote about the imposition of VAT effective from 25th April 2020 on insurance brokers and agents, you can read the article here.
At the time, there were many different opinions as to who should pay and who is responsible. The Association of Kenya Insurers (AKI) took it upon themselves as an organisation to obtain legal opinion from a well-respected legal firm in Kenya. As a result of this, it does suggest that the ultimate responsibility for this additional cost, lies with the Insurers themselves. As such, we have been advised that they will account to the brokers/agents for the 14% of our commission, and we must pay it to the KRA in the usual fashion of paying VAT.
As you would expect, this additional cost has not gone down too well with Kenyan insurers; in effect it means that they will need to account for this tax, with no ability to recover it. We are advised that they are in the process of appealing the decision, or at the very least to seek an injunction whilst all parties can discuss and agree how the tax will be collected and administered.
For now, it will not affect the ultimate buyer of insurance, but we will keep you up-dated as and when we hear further.
If you have any questions related to any of the above please email us on [email protected] or call us on 254 (0)709 445 000.
Click below to have the blog read to you.