The Aviation operators in Kenya have warn against harmful tax changes that are yet to come to place soon.
As the deadline for Kenyans to give feedback on the Tax Laws and Tax Procedures Act approaches, the Kenya Association of Air Operators (KAAO) is urging the government to consider international tax guidelines.
They recommend aligning tax policies with standards set by the International Civil Aviation Organization (ICAO) and the East African Common External Tariff.
In their submission to the National Assembly Committee, KAAO raised concerns about the proposed tax changes.
They warned that these changes could harm Kenya’s position as a key aviation hub in the region if not carefully planned.
The Kenya Association of Air Operators, which represents the country’s aviation industry, highlighted the serious impact some of the proposed taxes could have.
They explained that the introduction of a 16% VAT on imported aircraft, spare parts, and related services would raise operating costs. This would make it more expensive to run aviation businesses in Kenya.
The operators added that higher costs would slow down fleet expansion and upgrades. This could weaken Kenya’s competitiveness in the aviation industry.
Reverse gains
Removing VAT exemptions, which have previously helped the sector grow, could reverse gains such as increased aircraft registrations and growth in passenger and cargo traffic.
KAAO also noted that the proposed taxes would have broader negative effects. They could discourage investment and innovation in aerospace technology.
Air travel costs would rise, which would hurt tourism, trade, and investment thus the reduction in revenue too.
The association emphasized the potential economic losses. The aviation sector, which currently contributes about 208 billion shillings to Kenya’s GDP, may see a decline in its impact.
Job creation could also suffer. Currently, the sector supports 26,000 direct jobs and 104,000 indirect ones. Any decline in growth could reduce these numbers.
About Adani
On a positive note, KAAO commended President William Ruto for ending the controversial Adani deal that almost took root.
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They also argued that the proposed concession of Jomo Kenyatta International Airport (JKIA) was not transparent or inclusive.
In conclusion, the Kenya Association of Air Operators is urging the government to carefully evaluate the proposed tax changes.
They believe a balanced approach is needed to support the aviation sector’s growth while ensuring Kenya remains competitive globally.
