Monthly water bills are set to rise after Kenya Revenue Authority (KRA) won the long-standing case with Water Services Regulatory Board (WASREB) to charge value added tax to sewerage services.

Consequently, citizens will now be charged 16 per cent VAT on water after, Attorney-General Githu Muigai supported KRA’s position to exclude sewerage services from tax exemption.

The water company had rejected the taxman’s demand to charge and remit taxes, stating that the two services are offered as one and can’t be separated. However, KRA insisted taxes must be paid for the sewerage services provided by the water and sewerage service providers. It states that there is a clear distinction between the provision of water and sewerage services in the law, and the VAT Act 2013 amendment made sewerage provision vatable.

In his legal opinion, the AG stated that the taxman was right in charging VAT on sewerage but he said the matter should be taken up with the Ministry of Water.

“The impact of such an interpretation on the affordability of sewerage services is a pure policy consideration that should be taken up with the Ministry of Water and National Treasury,” he said.

The water sector regulator termed the KRA’s decision to claim tax arrears from water companies unlawful and ill-advised as it would hurt the quest to provide essential services to the majority of Kenyans.

According to Wasreb’s CEO, Robert Gikubia, the move would only lead to the increase of current water tariffs and it would be a violation of the constitution in regard to access to clean and safe water.

As of the end of 2016, the 86 water companies in the country had 1.4 active customers (meters) and had supplied 243.8 million cubic metres of water to 11.1 million Kenyans.