No VAT reduction for Kenya contractors

June 23, 2009 12:00 am

, NAIROBI, Kenya, Jun 23 – The government has turned down a request by the Architectural Association of Kenya (AAK) to exempt from Value Added Tax construction projects exceeding Sh20 million.

The Association’s Chairman Steven Oundo had asked Prime Minister Raila Odinga to look into waiving the fee so as to “fast track and promote development prospects in the country.”

But Mr Odinga turned down the request saying with the ongoing global economic crisis, Treasury was unable to offer such a waiver within the current financial year.

He said the association’s concerns had been exhaustively discussed by the Ministry of Finance and that the exemption proposal would be considered in the next Budget.

The government also rejected a call by the association to stop demolishing sites within 30 metres of river banks. Mr Odinga said such structures contravened environmental regulations.

He maintained that the government would pull down illegally erected structures to ensure that sanity prevailed in the construction sector.

Mr Odinga blamed previous regimes for “the current mess in the town planning department” but insisted that the new administration was determined to right the wrongs.

“We cannot afford to entertain people encroaching on road reserves or any open space designated for a public activity and that is why we must stop this madness,” he said.

On the review of construction laws, Mr Odinga said a policy guideline for the reassessment was already before the Attorney General.

The Premier said the need to review the regulative mechanism in the industry became necessary after professionals attributed mishaps on construction sites to an influx of bogus practitioners.


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