A Cabinet sub-committee has approved the reinstatement of construction levies, setting the stage for the return of the environmental audit fee that is as high as Sh40 million.
The implementation of the decision of the sub-committee to reverse the ban on collection of audit fees now awaits approval by the Cabinet.
A Cabinet sub-committee has approved the reinstatement of construction levies, setting the stage for the return of the environmental audit fee that is as high as Sh40 million.
The implementation of the decision of the sub-committee to reverse the ban on collection of audit fees now awaits approval by the Cabinet.
The fee was scrapped in January 2017 to ease the burden of investors seeking to venture into real estate and fast-track procedures to start such businesses.
Cabinet said construction levies charged by State agencies and county governments have been a barrier to investments.
Contractors pay environmental audits of between Sh10,000 and Sh40 million depending on the risk levels of their projects.
Developers whose projects exceed Sh5 million also pay a levy of 0.5 per cent of the value of the contract before they can start work to the National Construction Authority (NCA).
The Mining ministry in 2014 started collecting a two per cent royalty on construction materials — increasing the cost of quarry stones, concrete blocks, hardcore, ballast and sand. This is on top of the county approval fee, which is levied based on the size and cost of a home.
The National Development Implementation and Communication Cabinet Committee (NDICCC) has now approved a memorandum on the reinstatement of the Environmental Impact Assessment (EIA) licence fee.
“Though this memorandum was approved by the NDICCC, it may not be implemented or communicated until the decision is ratified by Cabinet.
“The same will be given high priority when the next Cabinet meeting is convened,” Head of Public Service Joseph Kinyua said in a letter dated May 26, 2021, to Environment secretary Keriako Tobiko.
The memorandum was jointly submitted by Cabinet secretaries of Environment, National Treasury and Industrialisation as well as the Attorney-General.
The Cabinet banned the collection of the EIA levy paid to the National Environment Management Authority (Nema) as well as levies charged by the NCA.
Before the ban, The Nema had been levying a processing fee to the tune of 0.1 percent of the project value. The regulator had in September 2013 removed a flat rate charge and introduced a minimum assessment fee of Sh10,000 or 0.1 percent of project cost, without an upper limit.
The regulation removed the maximum limit of Sh1 million that existed previously, making it punitive for large-scale real estate developers.
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