Banks and other lenders including saccos will now be spared imposition of Value Added Tax (VAT) on sale of repossessed collateral from defaulting borrowers, marking a major win for lenders in a long drawn fight with the Kenya Revenue Authority (KRA).
The Finance Act, 2026, which was signed into law by President William Ruto on Tuesday, has amended Part II of the first Schedule of the VAT Act to include sale of repossessed collateral arising from enforcement of security for loans as an exempt item.
