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The Kenya Association of Manufacturers (KAM) has called for the immediate suspension of a number of provisions in the Finance Act 2021. This is in a bid to cushion citizens from further loss of their purchasing power of basic commodities.

Early this year, the Finance Bill 2021 was proposed, after extensive engagement with stakeholders. However, according to KAM Chairman Mucai Kunyiha, tax provisions which were not subject to public participation were introduced.

These new additions, according to Mr. Kunyiha, have dealt a negative blow to the gains foreseen by many businesses in the Bill and have a far-reaching debilitating impact on key sectors of industry. For instance, excise tax has been introduced on a variety of raw materials, effectively increasing the cost of manufacturing and final consumer prices.

“It is imperative that the Government understands that the inclusion of these taxes significantly threatens the Made in Kenya goal, and gives an upper hand to cheaper imports from other countries. Additionally, we continue to lose our competitiveness in both local and export markets,” added Mr. Kunyiha.

KAM has therefore expressed concerns about the following added taxes.

  1. Imposition of 10% excise tax on articles of plastics.
  2. Imposition of 10% excise tax on imported resins.
  3. Imposition of 10% excise tax on super absorbent polymer (SAP) used in the manufacture of baby diapers.
  4. Imposition of Ksh. 200 per kg excise tax on locally produced white chocolate.
  5. Imposition of excise tax on imported fertilized eggs for incubation/hatching.
  6. Imposition of 16% VAT on the supply of liquefied petroleum gas (LPG) including propane.
  7. Imposition of 16% VAT on clean and improved cook stoves.
  8. Imposition of higher specific import duties for some categories of timber products.
  9. Provision to limit interest to be deducted to a maximum of 30% of Earnings Before Interest Tax, Depreciation and Amortization.

Mr. Mucai further stated that these last-minute additions into a critical national document are impractical and ineffective. “With taxation becoming a major area of frustration for businesses in the country, large segments of the Kenyan economy are invariably pushed into the informal sector,” he explained.