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Wealthy Kenyans to save millions following tax cuts on chopper imports

Big win for Kenya's elite as President Ruto scraps taxes on aircraft & parts

President William Ruto and his deputy Rigathi Gachagua during a trip to Homa Bay

The Finance Bill 2023 has proposed tax exemptions for aircraft importers and buyers who are set to celebrate if the law is passed by the National Assembly.

The bill proposes that importers of these aircraft and parts be exempt from paying the 16 per cent Value Added Tax (VAT), a move that is expected to have a considerable impact on the cost of importing such aircraft.

The Finance Bill 2023 has also proposed that aircraft be exempt from the 3.5 per cent Import Declaration Fee (IDF) and the two per cent Railway Development Levy (RDL).

This proposal is expected to further reduce the cost of importing aircraft, making it more feasible for businesses and individuals to invest in the aviation sector.

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With helicopter costing hundreds of millions, the tax cuts means that buyers will save a lot of money.

The bill is currently in the public participation stage and Kenyans are expected to submit their views before being taken to Parliament.

The tax incentives will benefit wealthy Kenyans who own choppers as well as the aviation industry stakeholders.

The major beneficiaries are buyers of aircraft not exceeding 2,000 kilogrammes and helicopters of less than two tonnes and aircraft of more than 2,000 kilogrammes,” Robert Waruiru, a partner in charge of tax and regulatory at Ichiban Tax & Business Advisory commented.

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In Kenya, the ownership of choppers and aircraft is a symbol of prestige and wealth. The country's political and business elite frequently use private jets and helicopters to travel within the country and beyond its borders.

However, aircraft ownership in Kenya is not limited to the elite, with an increasing number of businesses and individuals acquiring planes and choppers for personal and commercial use.

The process of acquiring an aircraft in Kenya can be a daunting task, involving several legal and regulatory requirements.

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The Kenya Civil Aviation Authority (KCAA) is the regulatory body responsible for licensing aircraft and ensuring compliance with safety and security standards.

According to data from the Economic Survey 2023, Kenya's aircraft imports and registration numbers saw a slight decline in 2022.

The country imported aircraft and related equipment valued at Sh15.1 billion, down from Sh17.9 billion in 2021. The decrease was attributed to the high cost of imports, which has been compounded by the ongoing global semiconductor shortage.

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