The government has set its sights on schools’ extra-curricular activities in a new plan to introduce VAT on education services.
The move is expected to hit parents in elite and top schools that provide multiple services outside regular curriculum activities, which are currently exempt from VAT.
“The exemption from VAT on education that includes all services provided by schools creates unfairness as some services like swimming when offered out of school are vatable. To remove this discrimination, there is a need to impose VAT on the additional benefits. In this respect, the government will explore the introduction of VAT on services provided by schools but not directly related to education,” the National Treasury stated.
Elite schools usually offer activities outside the standard curriculum, dictating premium fees which rise to as much as Sh3 million a year.
The extra services/activities usually act as springboards into careers such as music or sports while others teach new technologies.
Targeting the extra-curricular activities with VAT could mean the already premium fees demanded by such schools will only get steeper.
Crawford International School for instance has its terms as a parallel curriculum where it offers courses only matched by tertiary education institutions such as universities and colleges.
“We offer a parallel curriculum where students are exposed to entrepreneurship, leadership, filming and scriptwriting, cryptocurrency, study skills, and careers development courses,” school principal Jenny Coetzee told the Business Daily in an interview last year.
According to an analysis by the International Schools Database in April this year, Nairobi is home to the highest fees for elite schools on the continent with fees reaching highs of Sh4.5 million ($31,000) per year.
Nairobi has held this position since 2019 when the International Schools Database first carried out the analysis.
While all education services have been exempt from VAT, the Treasury says the benefit of exemption has not been uniform due to varying school fees and services.
“Education services in Kenya are exempt from VAT to make education accessible to all learners. However, the benefit of the exemption is not uniform across all learners due to differences in fees charged and services provided,” the National Treasury noted.
VAT on the ‘extra’ education services is expected to impact parents of children in elite schools who are already dealing with the effect of recent fee adjustments.
Elite schools for instance increased school fees by up to 25 percent in years following the Covid-19 pandemic with the cost rise being partly attributed to price adjustments for inflation.
Most recently, the sharp depreciation of the Kenyan shilling against world majors has put a strain on parents where fees in most elite schools, in particular international ones, are quoted in dollars.
Some international schools such as the Netherlands School Society for instance only accept payments in hard currency (Euros).
