Kenya Union of Savings & Credit Co-operatives (KUSCCO) has submitted policy proposals to the National Treasury aimed at strengthening SACCOs and protecting member welfare.
Among the proposals is the amendment of Section 19A of the Income Tax Act (ITA) to provide a uniform tax treatment for all types of cooperatives societies, recognizing their shared goals and contributions to the economy and community regardless of their membership structure.
The proposed amendment should aim to align the tax treatment of SACCOs whose membership includes individual persons with that of SACCOs whose membership includes groups of individual persons and corporate persons, ensuring fairness and equity.
The amendment also aim to ensure that the tax provisions do not disincentive the formation and operation of any type of cooperative society, including SACCOs whose membership includes both groups of individual persons, corporate persons and individual persons.
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KUSCCO says, implementing the changes will create a tax framework that supports the cooperative movement in Kenya, fostering inclusivity, sustainability, and equitable growth across all cooperative models.
The organization of Saccos also stated that the proposed amendment is necessary to ensure harmony between Kenya’s tax laws and the legal framework governing cooperative societies.
Section 16 of the Co-operative Societies Act expressly permits SACCOs to admit corporate bodies, alongside individuals and groups of individuals, as members.
The statutory provision reflects the evolution of the cooperative movement toward inclusivity and institutional participation.
The Income Tax Act currently limits favorable tax treatment to SACCOs whose membership comprises only individual persons, creating a direct conflict between the enabling provisions of the Co-operative Societies Act and the tax regime. Such inconsistency undermines legal certainty and exposes SACCOs to interpretational disputes and compliance risks.
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“Aligning the Income Tax Act with the Co-operative Societies Act will eliminate this contradiction and uphold the principle of legislative harmony, ensuring that tax statutes complement rather than frustrate sector-specific laws,” read part of the proposal by KUSCCO.
KUSCCO Group Managing Director Arnold Munene had written to national treasury presenting the proposals which were received on 31st December 2025 .They requested an opportunity to engage the National Treasury to further deliberate on the proposals and recommendations.
By Obegi Malack
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