Posta scraps levy to sell letter boxes

By IVY NYAYIEKA

The Postal Corporation of Kenya (PCK) has effected an exemption from value-added tax (VAT) that effectively makes it cheaper to rent postal boxes.

The move, aimed at wooing customers to the struggling firm’s services, was part of a proposal in the Finance Bill 2018/19 to exclude postal and subsidiary services the PCK currently offers from the levy.

“The First Schedule to the Value Added Tax Act, 2013 is amended in Part II [for exempt supplies] by adding the following new paragraph…Postal services provided through the supply of postage stamps, including rental of post boxes or mail bags and any subsidiary services thereto,” said the Bill.

Under the revised price regime, an individual post office box now costs Sh2,027 every year compared to the previous Sh2,320.

The VAT exemption was also to apply for postage stamps but Posta had not responded to the Business Daily’s queries on whether this had been affected by press time.

The move is the latest in the State-owned firm ’s fight for survival in the wake of stiff competition and technological advances that have led to a nosedive in the demand for its services over time.

Financial troubles led to a Sh1.5 billion loss last year as its private letter boxes, courier operations and expedited mail service business stagnated.

The move to exempt VAT is in contrast with last year’s increase of its rates by up to 64 per cent in a bid cover rising mail conveyance, staff and fuel costs.

Posta also launched stand-alone letterboxes last year for businesses but later scrapped it following poor uptake.

In 2017, the firm also indicated it had dropped its bid to invest in the public transport sector, saying it would be difficult to compete with well-established courier firms and matatus.

This year, PCK said it was investing in an e-commerce a platform through which customers order goods from different retailers and have them delivered to their doorstep. The firm plans to cash in on the convenience of delivery of household necessities for relatives in rural areas.

“We are actually exploring the opportunity of getting into e-commerce whereby we are going to have an end-to-end solution in terms of service delivery that you buy something from somewhere we ensure as much as you buy it online we will ensure that that item that you bought is basically delivered to your doorstep,” said Information PS Jerome Ochieng.