State extends tax waiver on goods supplied to the disciplined forces

Kenyans are currently groaning under the yoke of taxes.

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The government has extended the waiver of taxes on goods supplied to the Kenya Defence Forces (KDF)(under the Defence Forces Welfare Services- a successor to the former Defence Forces Canteen Organisation(Defco) and Armed Forces Canteen Organisation(Afco).

Excisable goods including alcoholic and non-alcoholic beverages supplied to the disciplined forces including materials supplies, equipment, machinery and motor vehicles will be exempt from taxation.

At the same time, vatable goods supplied to the forces will be exempt in addition to earning reprieve from incurring import declaration fees and the railway development levy.

The waiver follows proposals submitted by the Ministry of Defence on behalf of the KDF to the National Assembly Finance and National Planning Committee.

“The committee observed that KDF proposed an amendment to exempt the goods destined to the Defence Forces Welfare Services from the respective taxes. This is to align the exemption previously enjoyed by former Defco and Afco which is now referred to as Defence Forces Welfare Services,” the National Assembly committee stated in its report considering the 2024/25 revenue-raising measures.

Defco has been the official trading organisation for the army, the airforce and the navy since 1974 and was formally known as Afco. The waiver of taxes on goods supplied to KDF personnel is premised on the critical role played by the disciplined forces in ensuring the security of the country. Defco has been financially self-supporting with no capital or shareholders and serves no private interests.

The entity has been operating solely for the benefit of members of the three KDF arms and ploughs back profits to its operations.

According to the most recent disclosures by the Ministry of Defence, Defco has been operating a medium-sized chain of supermarkets with 23 shops and 10 cafeterias and employs close to 800 personnel.

Some of the functions undertaken by Defco include the provision of items required for service personnel, the operation of canteens and shops, and hire purchase scheme facilities.

The operations of the Defco have been overseen by the DFCO Council, a top policy-making body chaired by the Commander of Defence Forces and whose other members include service commanders and a managing director.

Defco tabulated its annual turnover to stand at over Sh1 billion.

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