A new tax aimed at developing expertise in public procurement is set to impact contractors supplying goods and services to Kenyan government agencies, the Treasury announced.
The “capacity building levy” will be applied at a rate of 0.03% of the total contract value, excluding taxes, for procurement deals with state agencies, according to regulations published by Treasury Cabinet Secretary Njuguna Ndung’u in November.
Suppliers must pay the levy on all contracts, including multi-year deals where the full amount is determined upfront and deducted incrementally. It covers procurement contracts as well as local purchase orders, service orders and milestone-based agreements.
“The purpose of the levy shall be to provide funds for the development of capacity through training, technical support, and mentoring,” the Treasury stated, saying it aims to promote value for money and improve public services.
The Association of Public Sector General Suppliers opposed an earlier draft in August, arguing that capacity building should fall under the National Industrial Training Authority.
As the new levy kicks in, contractors and government bodies will need to account for the additional costs in procurement. The Treasury maintains the funds will bolster expertise across Kenya’s public procurement system.
