The Digital Lenders Association of Kenya [DLAK] has warned Kenyans that they should brace themselves for higher mobile loan interest should Parliament pass new tax guidelines proposed in the Finance Bill 2022.
Kevin Mutiso, the chairperson of DLAK revealed this during an interview on a local TV station where he stated that the per cent exercise duty proposed in the Bill will have to be incurred by the borrowers.
Mutiso did say that the lenders could not incur the costs as the majority of them were not making profits.
He further explained that the majority of lenders had already made their budgets for the financial year, adding that the new tax proposals will impact their operations
should they be passed?
“When you introduce taxes shockingly into the system, we as the investors are unable to plan so as a result of that, currently, we are going through the compliance
process. Now we have to readjust our budget and we have to increase the cost to
the customer or reduce the pricing of the loans where we incur the cost.
“We shall have to pass the cost to the consumer and then figure out how to reduce
it,” he stated.
The proposed finance report was tabled before the National Assembly by the Finance Committee led by Homabay Woman Representative, Gladys Wanga.
It proposed that the exercise duty be introduced to enable the Kenya Revenue
Authority to meet its tax collection targets.
“The First Schedule to the Excise Duty 2015 is amended by inserting the following provision, excise duty on fees charged by digital lenders at a rate of 20 per cent,” read the Committee report.
Interest rates charged by digital lenders are currently approved by the Central Bank of Kenya (CBK) following the passing of the Central Bank Act of 2021.
The majority of digital lenders currently charge an interest rate of between 15 and
19 per cent.
This framework was developed after coparcener raised over the breach of Kenyans’
details after people complained of being called over loans taken by their
friends and relatives.
