Kenya’s National Assembly has passed the Tax Laws (Amendment) Bill, which would keep VAT on petroleum products at 8%, below the standard rate of 16%.
Majority Party Leader Kimani Ichung’wah, who sponsored the bill, proposed extending the relief for another three months. If the conflict in the Middle East continues, the Cabinet Secretary responsible for the National Treasury could extend it for a further three months.
Ichung’wah said the measure is intended to shield consumers from rising global fuel prices. He also expressed hope that oil exploration in Lokichar and the proposed Dangote refinery in Lamu County could eventually make Kenya less vulnerable to global oil price shocks.
The bill also proposes changing excise duty on ceramic tiles, other ceramic products and bathroom ware. The current system charges either 5% of the excisable value or Kshs. 50 per kilogramme. Under the proposed formula, duty would be based on surface area in square metres rather than weight.
Ichung’wah said a container carrying about 25,000 kilogrammes of tiles could incur excise duty of around Kshs. 1.25 million, potentially more than the consignment’s value. He said the amendment could lower the tax on a typical consignment from between Kshs. 1.2 million and Kshs. 1.5 million to approximately Kshs. 420,000–600,000.
Finance and National Planning Committee Chairperson Kimani Kuria said the government had forgone about Kshs. 54 billion in revenue over the previous six months because of the tax relief measures. Lawmakers supporting the bill said fuel prices affect transport fares, food costs and the cost of doing business.
