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June 25, 2026
3h ago

Relief for Lenders as New Law Ends Long-Running KRA Tax Dispute

Relief for Lenders as New Law Ends Long-Running KRA Tax Dispute

Banks had warned that the disputed requirement could have increased lending costs, ultimately passing an additional financial burden to borrowers...

✨ Key Highlights

Banks and SACCOs are now exempt from paying Value Added Tax (VAT) on the sale of repossessed assets, following the enactment of the amended Finance Act 2026.

  • The Finance Act 2026, signed into law on June 23, has formally exempted lenders from VAT on repossessed collateral.
  • This legislative change aims to resolve a longstanding tax dispute between financial institutions and the Kenya Revenue Authority (KRA).
  • The Kenya Bankers Association (KBA) had previously argued that taxing loan recovery processes would unfairly increase lending costs, potentially passed on to borrowers.

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