Teachers reap from Sacco dividends payout amid new tax on savings

Teachers reap from Sacco dividends payout amid new tax on savings

Teachers have continued to earn immensely from their savings inform of shares at the Saving and Credit Cooperative Societies (SACCO).

Since the month of January 2024 SACCO’s have continued to declare their dividends payout to members after conducting the Annual General Meetings (AGM).

Many large and performing SACCCO’s are teachers owned and are characterized by huge membership with regular savings. The teachers SACCO’s are found almost in each of the 47 counties.

Majority of these SACCO’s have however expanded to increase membership and boost its savings especially from the Jua Kali sector and County government employees.

In December 2023 the government revealed that member deposits in SACCO’s have crossed the Sh1 trillion mark for the first time.

Data from the State Department of Cooperatives showed savings grew by 15.6% to Sh1.047 trillion in the year to June 2023 from Sh906 billion, marking a major milestone for Kenya’s cooperatives movement.

“Target achieved as a result of improved member confidence and access to financial services through the adoption of digital channels by Saccos,” said the State Department.

In Kitui county, Suluhu SACCO located in Mwingi sub-county declared a dividend payout of 12.3% interest on deposits and 17% interest on share capital.

Kitui Teachers Sacco with sh 10 billion in assets and which has refuted claims that it has rebranded boasts of 20,000 active membership.

Cosmopolitan SACCO in Nakuru declared a 12.03% interest on deposits and 16% on share capital.

Teachers with savings with Tower SACCO reaped huge as it paid 13% interest on deposits and 20% interest on share capital.

Teachers with savings at the Metropolitan Sacco are still waiting for the AGM which will give way to dividends payout.

Has your SACCO conducted AGM and paid dividends to members? Please let us know more in the comment section

However what most teachers saving with SACCO’s don’t know is that the government has slapped a new tax on non-withdrawable deposits popularly known as BOSA (Back Office Services Activities) in SACCO’s to boost revenues to fund the sector regulator’s operations.

Non-withdrawable deposits mean that the share capital paid by a member cannot be reduced or removed.

A schedule by the Sacco Societies Regulatory Authority (Sasra) shows that all SACCO’s registered under the Sacco Societies (Non-Deposit Taking Business) Regulations, 2020, would from January 1, 2024, pay a varied annual levy over the next four years to December 31, 2027.

The annual levy, to be known as the Annual Sacco Societies Levy, is set at 0.10 percent of the non-withdrawable deposits between January 1 and December 31, 2024, before climbing to 0.13 percent in 2025, 0.14 percent in 2026, and 0.15 percent in 2027.

“The levy paid under subparagraph (1) shall be based on the total non-withdrawable deposits held by the Sacco society as indicated by the audited financial statements of the Sacco society for the immediately preceding financial year,” Sasra chairman Jack Ranguma and chief executive officer, Peter Njuguna said.

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