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ATM charges, account fees and over-the-counter withdrawals in Kenya

This is after President Uhuru Kenyatta proposed to double the taxes to 20 per cent from the current 10 per cent, effectively shooting up the cost of bank charges like ATM, account fees and over-the-counter withdrawals.
President Kenyatta’s proposal to double the tax on bank transactions is contained in the memo he sent to Parliament after rejecting the Finance bill which had among other things proposed the total scrapping of the 16 percent Value Added Tax on petroleum products.
“Exercise duty on other fees charged by the financial institutions shall be 20 per cent of their excisable value,” he said in the memo.
playPresident Uhuru Kenyatta. (Twitter)

This new tax will also affect stockbrokers, fund managers and insurance firms that charge fees for their services.
As is the norm, bankers say they will pass on the additional tax to consumers. Banks charge consumers varying fees on account-related transactions.
Customer transactions that generate fees include obtaining account statements, ATM withdrawals and cheque clearance services.
The government is cash trapped and in recent weeks has been at its wits end thinking of new ways of increasing its revenue streams including coming up with some ‘unpopular means’ of collecting revenue.
playAn ATM machine in Kenya. (bloomberg.)

Banks earned Sh70.6 billion from fees and commissions as well as transaction charges for loans last year, meaning Treasury is expected to raise at least Sh7 billion from the lenders from the tax increase.
In 2016, Kenya capped commercial lending rates at four percentage points above the Central Bank Rate, and set a minimum deposit rate, squeezing profit margins for banks.
This has seen banks come under pressure to rely more heavily on fees, commissions and other charges to achieve the soaring earnings growth and dividends they previously enjoyed and that shareholders expect.
Central Bank of Kenya in October 2016 ordered commercial banks to immediately stop charging their customers any new levies following the coming into force of the new law putting a ceiling to interest rates charges.
ATM charges, account fees and over-the-counter withdrawals in Kenya ATM charges, account fees and over-the-counter withdrawals in Kenya Reviewed by OPEYEMI M.A on 8:30:00 am Rating: 5

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