Kenya Airways, Africa’s most unprofitable airline, and its subsidiaries have been exempted from paying the minimum tax set at one percent of gross turnover.
The National Assembly Committee on Delegated Legislation approved the exemption, a lifeline for the national carrier grappling with mounting losses in the wake of the Coronavirus disruptions. National Treasury Secretary Ukur Yatani had announced the tax shield for Kenya Airways and its subsidiaries through a Kenya Gazette notice dated March 17, 2021 and sent the notice to Parliament for approval.
The tax exemption targeted airlines where the State owns at least 45 percent stake and its subsidiaries. Kenya holds a 48.9 percent stake in Kenya Airways (KQ). KQ had applied for exemption in the wake of the Coronavirus disruptions that led to the grounding of its fleet due to the ban on international flights in March last year.
“The committee recommends that the House approves the said statutory instrument in accordance with section 13(2) of the Statutory Instrument Act,” the committee said.
KQ had in its push for the exemption said that it has been paying its lease expenses and fees for inspection of its aircraft, adding that payment of the minimum tax would make its operations unsustainable.
The minimum tax was introduced on January 1 and seeks to ensure that firms that are in perpetual losses also contribute to the National Treasury. Without the protection, KQ was scheduled to make its first minimum tax payment by April 20 covering the first three months of its current financial year.
