In a bold move to increase government revenue, the authorities have set their sights on the exclusive realm of top-tier education, proposing a new value-added tax (VAT) on educational services beyond the core curriculum. This strategy is expected to send shockwaves through elite schools, where parents have long enjoyed exemptions from VAT on these supplementary offerings.
The brunt of this tax reform is poised to land squarely on parents who have enrolled their children in prestigious educational institutions, where many extra-curricular activities and specialized courses come as part of the package. These elite schools have traditionally commanded premium tuition fees, reaching astronomical heights of up to Sh3 million annually.
Within these hallowed halls, students have access to a treasure trove of supplementary services, serving as launchpads into diverse careers ranging from music and sports to cutting-edge technology. With the introduction of VAT on these supplementary educational services, parents can anticipate a further ascent in the already steep fees imposed by these schools.
Take, for example, the Crawford International School, a pinnacle of educational excellence that offers an educational experience rivaled only by tertiary institutions such as universities and colleges. According to an April analysis by the International Schools Database, Nairobi reigns supreme as the continent’s leader in elite school fees, with some institutions charging as much as Sh4.5 million ($31,000) per year.
Nairobi has proudly held this prestigious position since 2019 when the International Schools Database first embarked on this enlightening analysis.
While previously all education services enjoyed VAT exemptions, the Treasury argues that the benefits of this exemption have not been evenly distributed due to disparities in school fees and the nature of services provided. The proposed VAT on these ‘extra’ educational services threatens to compound the financial burden already borne by parents with children attending elite schools, who are still grappling with the financial aftershocks of recent fee hikes.
In the wake of the COVID-19 pandemic, many elite schools felt compelled to implement significant fee increases, some reaching as high as 25 percent. These price adjustments were partly attributed to inflation that loomed large over the educational sector. More recently, the sharp depreciation of the Kenyan shilling against major world currencies has further strained parents’ finances. This predicament is particularly acute for international schools, where fees are often quoted in dollars, amplifying parents’ financial challenges.
As this new VAT proposal looms on the horizon, parents of elite school students find themselves in a quandary, navigating an educational landscape fraught with financial uncertainties. The debate over the imposition of VAT on these extra-curricular services has begun, leaving both educational institutions and parents anxiously awaiting the government’s final decision.
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