The government has shifted focus to basic learning institutions on taxation, seeking information on their tax obligations for the last three years for purposes of expanding the tax bracket.
Consequently, public schools may be netted for tax if the information generated meets the threshold for it.
This has been revealed through a circular sent by the Ministry of Education (MoE) dated June 19, 2024 and signed by Evelyne Owoko on behalf of the Basic Education Principal Secretary Dr Belio Kipsang, requesting all County Directors of Education (CDEs) to provide data of public and private schools in their respective jurisdictions.
KRA had requested the ministry to submit comprehensive details of the basic learning institutions from January 1, 2021 to December 31, 2023 in order to verify whether the institutions have been meeting their tax obligations.
The data, which is supposed to reach the ministry latest today, will help the taxman to assess the taxable income the schools have generated over the said period and find out whether they are tax compliant.
“The Kenya Revenue Authority (KRA) vide their letter Ref. No. KRA/5/1002/5 (10777) dated 29th May, 2024 has requested the Ministry of Education to provide comprehensive data regarding the above institutions for the period 1st January 2021 to 31st December, 2023 to enable KRA verify whether the institutions have been funding their tax obligations, through assessing the taxable income that the institutions generated and monitoring tax compliance. The purpose of this letter therefore is to ask you to avail the data using the attached format. The data should reach this office on or before 21st June, 2024,” the circular reads.
The details that KRA has requested include the name of the school, its KRA PIN number, e-mail address, registration number of the school and its phone number, location, economic activity, and directors or officials names, ID and phone numbers, and their e-mail addresses.
According to the recently released 2024 Economic Survey report, the total number of schools in the country rose by 4.9 per cent to 93,988 in 2023 from 89,615 in 2022.
The number of primary schools increased by 9.6 per cent; from 32,469 in 2022 to 35,570 in 2023. This includes 23,831 public and 11,739 private schools. The number of secondary schools rose by 2.2 per cent to 10,752 in 2023; that is, 9,485 public and 1,267 private schools.
However, educational services, including those provided by government institutions, are exempt from Value Added Tax (VAT) under Article 43(1) of the Constitution.
Government institutions established solely for the advancement of education are also exempt from income tax.
Nevertheless, private schools are subject to regular income tax rules. Their income is taxable unless they qualify for specific exemptions.
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