Features & Sacco Leadership

Exploring government levy on non-withdrawable SACCO deposits

Exploring government levy on non-withdrawable SACCO deposits

Data from the State Department of Cooperatives reveals that SACCO savings surpassed the one trillion shilling mark in the financial year 2023, marking a significant achievement for the SACCO movement despite prevailing economic challenges. However, this milestone came alongside the introduction of a new government levy on non-withdrawable SACCO deposits.

Non-withdrawable SACCO deposits refer to the share capital paid by a SACCO member that cannot be reduced or removed. SACCOs categorized as non-withdrawable deposit-taking institutions operate by receiving deposits that are not available for withdrawal during membership. These deposits can be used as collateral for loans and domestic money transfers only.

New Tax Rate and Deduction

According to a schedule by the Sacco Societies Regulatory Authority (SASRA), all SACCOs registered under the Sacco Societies (Non-Deposit Taking Business) Regulations, 2020, are subject to a new annual levy starting January 1, 2024. The levy, known as the Annual Sacco Societies Levy, is set at 0.10% of the non-withdrawable deposits for 2024. The rate will gradually increase to 0.13% in 2025, 0.14% in 2026, and 0.15% in 2027. The levy is calculated based on the total non-withdrawable deposits held by the SACCO society as reported in the audited financial statements for the immediately preceding financial year.

Purpose of the Levy

The primary aim of this levy is to fund the operations of SASRA, the sector regulator. This move is part of the government’s broader efforts to boost revenues through tax collection. Additionally, the levy is intended to help SASRA achieve financial independence by reducing its reliance on the Exchequer.

While the new levy introduces an additional financial obligation for SACCOs, it is also a step towards ensuring the sector’s stability and sustainability. The funds generated from the levy will support SASRA in its regulatory role, ultimately benefiting the entire SACCO movement by promoting a more robust and well-regulated financial environment.

 

Andrew Walyaula
Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

Andrew Walyaula

About Author

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com

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