Rédaction Africa Links 24 with Kenyans.co.ke
Published on 2024-02-25 00:12:43
The Cabinet Secretary for Cooperatives, Simon Chelugui, recently made an announcement regarding plans to amend the Cooperatives Act to eliminate taxes on dividends for members of Savings and Credit Cooperative (SACCOs). This decision was communicated during the Kenya National Police SACCO annual meeting, where Chelugui confirmed that he was in discussions with Treasury CS Njuguna Ndung’u to address the issue.
Chelugui explained that the taxation of SACCO dividends led to double taxation since the government already deducted a portion of money from members’ salaries. He acknowledged the concerns raised by various SACCOs through petitions and highlighted the need to address the issue of double taxation. This move aimed to alleviate the burden on SACCO members and encourage more Kenyans to join and remain in SACCOs without being discouraged by additional levies.
Furthermore, Chelugui committed to incorporating the tax amendments in the upcoming finance bill to incentivize Kenyans to register with SACCOs. Additionally, he announced the introduction of a Deposit Guarantee Scheme (DGS) to provide compensation to members in case a society is unable to meet its financial obligations. This scheme aimed to offer financial security and support to members of SACCOs during challenging times.
Chelugui emphasized the importance of regulatory policies and an instructive framework to empower cooperatives and small and medium enterprises (SMEs). He mentioned that the Treasury CS had assured him of addressing the concerns in the next finance bill, indicating the government’s commitment to creating a more conducive environment for SACCOs and their members.
Cooperatives were urged to evaluate their performance against the National Average Performance to identify areas for improvement. In 2019, the government introduced tax measures to streamline SACCO operations, which included an increase in the tax on dividends. The new law resulted in doubling taxes on members’ dividends, with the Kenya Revenue Authority (KRA) deducting 20% of the money.
Chelugui’s initiatives were aimed at promoting the growth and sustainability of SACCOs, fostering financial inclusivity, and supporting the cooperative movement in Kenya. By addressing the issue of double taxation and introducing the Deposit Guarantee Scheme, the government sought to provide a conducive environment for SACCOs to thrive and contribute to the country’s economic development.
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