Overview of the Implementation of Legal Notice No. 206: The Public Procurement Capacity Building Levy Order, 2023
The Kenyan government, through the Kenya Revenue Authority (KRA), has issued a formal notice regarding the enforcement of the Public Procurement Capacity Building Levy Order, 2023. This legal notice, designated as Legal Notice No. 206, aims to regulate the collection of a specific levy on public procurement contracts, with the overarching goal of enhancing the capacity of entities involved in public procurement processes across the country.
Object and Scope of the Levy Order
The primary purpose of this legal notice is to formalize the implementation of a levy on procurement contracts entered into by public entities. It mandates that all contracts signed from the commencement date, which was set for 1st September 2024, are subject to a specific levy fee. The levy is designed to generate funds that will support capacity-building initiatives, training, and technical assistance for public procurement professionals and institutions.
This legal framework applies broadly to all procurement transactions initiated from the specified date, including extensions, renewals, or modifications to existing contracts. It also covers long-term contracts, such as those involving Local Service Orders (LSOs) or Local Purchase Orders (LPOs), provided these are raised as part of the procurement process when orders are made or renewed.
Key Provisions and Requirements for Stakeholders
Scope of Application
- All signed procurement contracts from 1st September 2024 are subject to the levy.
- The levy applies to contracts of all durations, including long-term agreements, where LSOs or LPOs are issued.
- Contracts that are subject to the levy include those initiated or renewed after the specified date, ensuring comprehensive coverage of procurement activities.
Levy Rate and Calculation
The levy is calculated at a rate of 0.03% of the total value of the signed contract, exclusive of applicable taxes. This rate is consistent across all procurement contracts, regardless of the nature or value of the procurement.
Obligations of Suppliers and Procuring Entities
- Suppliers and contractors are expected to account for the levy when submitting bids or invoices related to procurement contracts.
- Procurement entities must ensure that the levy is correctly calculated and remitted to the Kenya Revenue Authority (KRA) as part of their contractual obligations.
- All invoices associated with LSOs or LPOs raised from 1st September 2024 must include the 0.03% levy, shown as a separate line item, to facilitate transparency and compliance.
Implications for Public Procurement Stakeholders
The implementation of this levy order signifies a strategic move by the Kenyan government to bolster the financial resources dedicated to enhancing procurement practices nationwide. For suppliers and contractors, this means an additional cost component that must be incorporated into their bid pricing and invoicing processes. For procuring entities, it necessitates adjustments in contract management and financial reporting to ensure adherence to the legal provisions.
Moreover, the levy aims to strengthen the capacity of public procurement officers and institutions through dedicated funding, ultimately leading to more efficient and transparent procurement procedures. This aligns with Kenya’s broader objectives of good governance, fiscal responsibility, and effective public service delivery.
Legal and Administrative Clarifications
For clarity and further guidance, stakeholders are advised to contact the Deputy Commissioner – Supply Chain Management at KRA via the official email: Procurement@Kra.go.ke. It is crucial for all parties involved in public procurement to observe the stipulations of the Legal Notice No. 206 to ensure compliance and to support Kenya’s ongoing efforts to improve public procurement systems.
In conclusion, the Legal Notice No. 206 and the associated Public Procurement Capacity Building Levy Order, 2023, represent a significant step towards sustainable development in Kenya’s public sector procurement landscape. Proper understanding and adherence to these provisions will be essential for all involved in public procurement activities moving forward.
