Commercial lenders are bracing customers for deductions on their accounts to pay for the Treasury's ‘Robin Hood’ tax.
Commercial lenders are bracing customers for deductions on their accounts to pay for the Treasury's ‘Robin Hood’ tax should the High Court rule that the levy ought to have been paid for the 19-day period before suspension.
Nairobi Securities Exchange-listed lender Stanbic Bank is the latest to inform its customers that they may have to pay taxes on all chargeable transactions for the period between July 1 when it took effect and July 19 when the court suspended it.
“Please note that should the High Court determine that the excise duty should have been collected, we advise that we will debit your account with the amount of excise duty chargeable on the applicable bank transfers initiated during this period,” wrote head of personal banking Silpah Owach in a notice.
This means that ahead of the hearing set for Monday, banks may debit customer accounts with the 0.05 per cent excise duty for applicable transfers during that period.
On Wednesday, the bank told the Business Daily that it had taken the decision independently even though it did not give details of how many accounts stand to be affected.
Last month, I&M Bank sent a similar e-mail to its customers. Its marketing and product development general manager, Suprio Sen Gupta, said that the lender had reversed to customers all the taxes they had collected after the implementation of the duty was suspended.
“If the court decides that we ought to have collected, we shall debit the accounts,” he said then.
Kenya Bankers Association (KBA) CEO Habil Olaka said there are lenders that did not know what to collect and so never implemented the taxes during the period it remained in force.
“Since each bank is affected differently, we do not have an industry stand. Each is taking independent decision based on how it had interpreted the law,” Mr Olaka said on Wednesday.
The High Court suspended the new taxes imposed under the Finance Bill 2018, including those on mobile money and kerosene after KBA argued that “bank transfer” is vague and the Treasury had not defined it.
Court papers show that KBA was seeking to delay implementation of the duty until a proper definition of the term “money transferred by banks” is provided and sufficient time allowed for banks to alter computer systems to implement the charge of duty.
On Wednesday, Mr Olaka said that once banks get clear definition, it will take them up to three months to configure their systems to start deductions.
“We are therefore seeking three months period to comply with the tax once the court gives us clear definition,” he said.
The court then directed Kenya Revenue Authority and Attorney General to file and serve replying affidavits and thereafter, all parties to file and exchange written submissions. The hearing to highlight the submissions will happen next Monday.