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{
    "id": 1254211,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1254211/?format=api",
    "text_counter": 162,
    "type": "speech",
    "speaker_name": "Prof. Njuguna Ndung’u",
    "speaker_title": "The Cabinet Secretary, National Treasury and Economic Planning",
    "speaker": null,
    "content": "Currently, exported services are subject to VAT at the rate of 16 per cent. This has caused an increase in the cost of exported services, hence affecting the competitiveness of our services in the global market. To increase competitiveness and encourage the exportation of taxable services, I propose to the National Assembly to remove VAT on exported taxable services. Currently, tea purchased for local value addition, either from the factories or tea auction centres, is vatable. This affects the cash flows of tea exporters. To encourage local value addition of our tea, I propose to the National Assembly to remove VAT on tea purchased from factories or tea auction centres for value addition and subsequent export. This will improve cash flows for tea exporters involved in local value addition. Hon. Speaker, currently, helicopters, aeroplanes and other aircraft of unladen weight not exceeding 2,000 kgs are subject to VAT. Further, some spare parts of tariff number 8803 are expressly exempt from VAT. However, VAT exemption on any other aircraft spare parts imported by aircraft operators or persons engaged in the business of aircraft maintenance is contingent upon recommendation by the competent authority responsible for civil aviation. This process creates an administrative burden on the taxpayer to comply with the requirements. We have also noted that the cost of aircraft maintenance and training activities has been high, prompting airlines to prefer undertaking those activities in other jurisdictions. To ease the process of VAT exemption of aircraft spare parts and encourage investment in this area, I propose to the National Assembly to remove VAT on all aircraft, simulators for training our pilots and aircraft spare parts. This proposal to expressly exempt all aircraft and spare parts of Chapter 88 from VAT will spur growth in the aviation sector and reduce the administrative burden of accessing its VAT exemption. The international best practice is to charge VAT on all goods and services, especially those that have undergone some form of processing. This is not the case in our VAT regime, as some goods that have undergone some processing are exempted from VAT, while others are The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}