Manufacturers call for implementation of National Taxation Policy

Tuesday, May 21st, 2024 02:00 | By
Kenya Association of Manufacturers CEO Anthony Mwangi. PHOTO/@KAM_Kenya/X
Kenya Association of Manufacturers CEO Anthony Mwangi. PHOTO/@KAM_Kenya/X

Local manufacturer’s lobby is urging the government to expedite the implementation of the National Taxation Policy, arguing that the policy is essential for ensuring tax stability, establishing tax incentives, and fostering a beneficial tax environment for investors.

Kenya Association of Manufacturers (KAM), CEO Anthony Mwangi says that the ongoing challenges faced by exporters, including delayed VAT refunds and high costs of intermediate products and packaging, will stymie growth in the manufacturing sector.

He took issue with the proposed Export Investment Promotion Levy (EIPL) on raw materials for manufacturing, which he said, could harm local industries’ competitiveness by increasing production costs.

According to the lobby, the EIPL levy imposed in 2023 on industrial raw materials, has already led to a 40 per cent increase in construction costs.

“We urge the National Assembly to consider the views of all stakeholders, including citizens and the business community, before adopting the proposals in the Finance Bill, 2024,” Mwangi said.

The introduction of an eco-levy on selected goods, as proposed in the Finance Bill 2024, is another point of concern for the manufacturers.

Mwangi warned that this levy will lead to a price increase on all plastic packaging materials, batteries, and hygiene products, and could potentially duplicate existing levies under Extended Producer Responsibility Schemes.

This, he argued, could undermine Kenya’s efforts to create a circular economy and become a regional recycling hub.

Mwangi further warned that the proposed increase in the Import Declaration Fund (IDF) from 2.5 percent to 3 per cent could raise the cost of raw materials and intermediate products, reducing the competitiveness of local industries.

Additionally, the removal of a provision in the Excise Duty Act, which allowed manufacturers to offset raw material costs, coupled with a new 10 per cent excise duty on plastic products, could significantly impact the cost of essential commodities.

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