The Kenyan government is taking significant steps to enhance the local aviation industry by proposing the elimination of the 16% Value Added Tax (VAT) on helicopters, spare parts, aircraft, and simulators.
The Treasury has proposed eliminating VAT on all aircraft and spare parts to help airlines overcome their financial struggles. This initiative was announced during the recent budget statement and aims to reduce the costs associated with aircraft maintenance and training. By streamlining the VAT exemption process, the aviation sector’s growth will be stimulated, and more investments are expected. Additionally, the intended VAT exemption will foster local pilot training programs.
Presently, helicopters, airplanes, and other aircraft weighing less than 2000 kgs are subjected to VAT. Additionally, some spare parts are explicitly exempt from VAT. However, VAT exemptions on other aircraft spare parts imported by aircraft operators or individuals involved in aircraft maintenance are dependent on the recommendation of the competent authority responsible for civil aviation.
The removal of VAT on aircraft and spare parts will foster investment and improve the economic landscape. The high costs have compelled airlines to seek maintenance and training services from other countries. By eliminating VAT, the Kenyan government aims to make Kenya a more appealing destination for such activities, thereby leading to job creation, increased revenue, and a flourishing aviation sector.