Manufacturers handed mixed bag in ‘Hustlers’ budget

Treasury Cabinet Secretary Prof Njuguna Ndung’u budget offered a mixed bag of goodies for local manufacturers and investors eyeing Kenya with a raft of proposals that will cushion some but hit others hard.

The CS proposed an extension of the exemption to locally purchased machinery for used by pharmaceutical companies to be exempt from VAT on importation.

He however proposed the introduction of excise duty on imported sugar at the rate of Sh5 per kilo excluding the sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products.

The CS also impose excise duty on imported furniture at the rate of 30 per cent of the customs value excluding the furniture originating from EAC countries to protect the local industry from proliferation of cheap imports that has reduced the competitiveness of locally produced paints, varnishes and lacquers.

Further, to protect the local paint manufacturers, the CS proposed the introduction of excise duty at the rate of 15 per cent of the excisable value on imported paints, varnishes, and lacquers.

The current interest deduction restriction based on earnings before interest, taxes, depreciation and amortization, was introduced in 2021 to discourage tax planning. This restriction currently applies to both local and foreign financial institutions.

Resident companies currently pay 30 per cent corporate tax while non-residents with permanent establishments pay 37.5 per cent of their gains or profit.

“This creates an impression that Kenya discriminates between residents and non-residents. In order to harmonise taxation treatment for residents and non-residents companies, I propose to the National Assembly to reduce the corporate tax rate for non-residents from 37.5 per cent to 30 per cent,” he said adding that to ensure a level playing field, there was also need to introduce tax on repatriated profits at a rate of 15 per cent which is equal to the rate charged on dividend paid to non-residents.

These rafts of measures may hit Kenya Kwanza’s administration plan to attract $10 million (Sh1.4 billion) in foreign direct investment (FDI).

The charm offensive of the executive and the Ministry of Investment, Trade and Industry (MITI) in European capitals, selling proposals pegged on facilitating new international trade opportunities while leveraging existing agreements such as the Economic Partnership Agreements (EPA) to attract the much-needed FDI. However, the government has kicked off doubling the Value Added Tax (VAT) on fuel from 8 to 16 per cent, a move that will put a dampener on the entire trade value chain through increases in all the associated costs of production, processing, and transportation of products, in essence making Kenyan products less attractive to the regional and international

Treasury Cabinet Secretary Prof Njuguna Ndung’u budget offered a mixed bag of goodies for local manufacturers and investors eyeing Kenya with a raft of proposals that will cushion some but hit others hard.

The CS proposed an extension of the exemption to locally purchased machinery for used by pharmaceutical companies to be exempt from VAT on importation.

He however proposed the introduction of excise duty on imported sugar at the rate of Sh5 per kilo excluding the sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products.

The CS also impose excise duty on imported furniture at the rate of 30 per cent of the customs value excluding the furniture originating from EAC countries to protect the local industry from proliferation of cheap imports that has reduced the competitiveness of locally produced paints, varnishes and lacquers.

Further, to protect the local paint manufacturers, the CS proposed the introduction of excise duty at the rate of 15 per cent of the excisable value on imported paints, varnishes, and lacquers.

The current interest deduction restriction based on earnings before interest, taxes, depreciation and amortization, was introduced in 2021 to discourage tax planning. This restriction currently applies to both local and foreign financial institutions.

Resident companies currently pay 30 per cent corporate tax while non-residents with permanent establishments pay 37.5 per cent of their gains or profit.

“This creates an impression that Kenya discriminates between residents and non-residents. In order to harmonise taxation treatment for residents and non-residents companies, I propose to the National Assembly to reduce the corporate tax rate for non-residents from 37.5 per cent to 30 per cent,” he said adding that to ensure a level playing field, there was also need to introduce tax on repatriated profits at a rate of 15 per cent which is equal to the rate charged on dividend paid to non-residents.

These rafts of measures may hit Kenya Kwanza’s administration plan to attract $10 million (Sh1.4 billion) in foreign direct investment (FDI).

The charm offensive of the executive and the Ministry of Investment, Trade and Industry (MITI) in European capitals, selling proposals pegged on facilitating new international trade opportunities while leveraging existing agreements such as the Economic Partnership Agreements (EPA) to attract the much-needed FDI. However, the government has kicked off doubling the Value Added Tax (VAT) on fuel from 8 to 16 per cent, a move that will put a dampener on the entire trade value chain through increases in all the associated costs of production, processing, and transportation of products, in essence making Kenyan products less attractive to the regional and internation

Treasury Cabinet Secretary Prof Njuguna Ndung’u budget offered a mixed bag of goodies for local manufacturers and investors eyeing Kenya with a raft of proposals that will cushion some but hit others hard.

The CS proposed an extension of the exemption to locally purchased machinery for used by pharmaceutical companies to be exempt from VAT on importation.

He however proposed the introduction of excise duty on imported sugar at the rate of Sh5 per kilo excluding the sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products.

The CS also impose excise duty on imported furniture at the rate of 30 per cent of the customs value excluding the furniture originating from EAC countries to protect the local industry from proliferation of cheap imports that has reduced the competitiveness of locally produced paints, varnishes and lacquers.

Further, to protect the local paint manufacturers, the CS proposed the introduction of excise duty at the rate of 15 per cent of the excisable value on imported paints, varnishes, and lacquers.

The current interest deduction restriction based on earnings before interest, taxes, depreciation and amortization, was introduced in 2021 to discourage tax planning. This restriction currently applies to both local and foreign financial institutions.

Resident companies currently pay 30 per cent corporate tax while non-residents with permanent establishments pay 37.5 per cent of their gains or profit.

“This creates an impression that Kenya discriminates between residents and non-residents. In order to harmonise taxation treatment for residents and non-residents companies, I propose to the National Assembly to reduce the corporate tax rate for non-residents from 37.5 per cent to 30 per cent,” he said adding that to ensure a level playing field, there was also need to introduce tax on repatriated profits at a rate of 15 per cent which is equal to the rate charged on dividend paid to non-residents.

These rafts of measures may hit Kenya Kwanza’s administration plan to attract $10 million (Sh1.4 billion) in foreign direct investment (FDI).

The charm offensive of the executive and the Ministry of Investment, Trade and Industry (MITI) in European capitals, selling proposals pegged on facilitating new international trade opportunities while leveraging existing agreements such as the Economic Partnership Agreements (EPA) to attract the much-needed FDI. However, the government has kicked off doubling the Value Added Tax (VAT) on fuel from 8 to 16 per cent, a move that will put a dampener on the entire trade value chain through increases in all the associated costs of production, processing, and transportation of products, in essence making Kenyan products less attractive to the regional and internation

Treasury Cabinet Secretary Prof Njuguna Ndung’u budget offered a mixed bag of goodies for local manufacturers and investors eyeing Kenya with a raft of proposals that will cushion some but hit others hard.

The CS proposed an extension of the exemption to locally purchased machinery for used by pharmaceutical companies to be exempt from VAT on importation.

He however proposed the introduction of excise duty on imported sugar at the rate of Sh5 per kilo excluding the sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products.

The CS also impose excise duty on imported furniture at the rate of 30 per cent of the customs value excluding the furniture originating from EAC countries to protect the local industry from proliferation of cheap imports that has reduced the competitiveness of locally produced paints, varnishes and lacquers.

Further, to protect the local paint manufacturers, the CS proposed the introduction of excise duty at the rate of 15 per cent of the excisable value on imported paints, varnishes, and lacquers.

The current interest deduction restriction based on earnings before interest, taxes, depreciation and amortization, was introduced in 2021 to discourage tax planning. This restriction currently applies to both local and foreign financial institutions.

Resident companies currently pay 30 per cent corporate tax while non-residents with permanent establishments pay 37.5 per cent of their gains or profit.

“This creates an impression that Kenya discriminates between residents and non-residents. In order to harmonise taxation treatment for residents and non-residents companies, I propose to the National Assembly to reduce the corporate tax rate for non-residents from 37.5 per cent to 30 per cent,” he said adding that to ensure a level playing field, there was also need to introduce tax on repatriated profits at a rate of 15 per cent which is equal to the rate charged on dividend paid to non-residents.

These rafts of measures may hit Kenya Kwanza’s administration plan to attract $10 million (Sh1.4 billion) in foreign direct investment (FDI).

The charm offensive of the executive and the Ministry of Investment, Trade and Industry (MITI) in European capitals, selling proposals pegged on facilitating new international trade opportunities while leveraging existing agreements such as the Economic Partnership Agreements (EPA) to attract the much-needed FDI. However, the government has kicked off doubling the Value Added Tax (VAT) on fuel from 8 to 16 per cent, a move that will put a dampener on the entire trade value chain through increases in all the associated costs of production, processing, and transportation of products, in essence making Kenyan products less attractive to the regional and international market.