Introduction
Data from the State Department of Cooperatives shows that SACCO savings’ value hit one trillion mark in the financial year 2023, for the first time amid economic challenges. While this is a huge milestone for the SACCO movement, the Government has introduced a new levy on the non- withdrawable SACCO deposits. Non- withdrawable SACCO deposits mean the share capital paid by a SACCO member that cannot be reduced or removed. Further, a SACCO is categorized as non-withdrawable deposit taking if it operates in receiving deposits that are not available for withdrawal for the duration of membership but can be used as collateral to obtain loans and domestic money transfers only.
Tax Rate and Deduction
A schedule by the Sacco Societies Regulatory Authority (SASRA) shows that all SACCOs registered under the Sacco Societies (Non-Deposit Taking Business) Regulations, 2020, would from January 1, 2024; pay a varied annual levy over the next four years up to December 31, 2027. The levy will be known as Annual Sacco Societies Levy and it will be set at 0.10% of the non-withdrawable deposits for 2024, before climbing to 0.13% in 2025, 0.14% in 2026, and 0.15% in 2027. Specifically, the levy paid shall be based on the total non-withdrawable deposits held by the Sacco society as indicated by the audited financial statements of the Sacco society for the immediately preceding financial year.
The Purpose of the Levy
While in the recent past, the government has put a lot of effort into boosting revenues through tax collection, the main aim of deducting the levy is to fund the sector regulator’s operations (SASRA). In addition, the levy will aid SASRA to gain some financial independence by reducing its reliability on the Exchequer.
Elizabeth mutua
May 3, 2024noted