The Kenyan government is making significant strides to boost the local aviation sector by proposing the removal of the 16% Value Added Tax (VAT) on helicopters, aircraft, spare parts, and simulators.
Recognizing the challenges faced by airlines due to high costs, the Treasury proposed the comprehensive removal of VAT on all aircraft and spare parts. This move aims to simplify the VAT exemption process and stimulate growth in the aviation industry.
Cabinet Secretary for the National Treasury and Economic Planning, Njuguna Ndung’u, made this announcement during the recent budget statement, emphasizing the need to alleviate the high costs of aircraft maintenance and training activities. The proposed VAT exemption is expected to attract more investment and promote local training programs for pilots.
A Boost for the Aviation Sector
“Currently helicopters, aeroplanes and other aircraft of unladen weight not exceeding 2000 kgs are subject to VAT; further some spare parts are expressly exempt from VAT. However, VAT exemptions on any other aircraft spare parts imported by aircraft operators or persons engaged in the business of aircraft maintenance are contingent upon recommendation by the competent authority responsible for civil aviation,” he said.
Cabinet Secretary Ndung’u believes that the removal of VAT on aircraft and spare parts will encourage investment and improve the economic landscape. He highlighted the fact that high costs have driven airlines to seek maintenance and training services in other jurisdictions. By eliminating VAT, the Kenyan government aims to make Kenya a more attractive destination for such activities, ultimately contributing to job creation, increased revenue, and a flourishing aviation sector.