An international bioethanol company on Tuesday raised fears that business in Kenya could become unconducive should the government approve a proposal in Finance Bill 2024 to introduce a 3 per cent levy on the fuel.
Presenting submissions to the National Assembly Departmental Committee on Finance and National Planning, the company noted that it had grown exponentially due to favourable tax terms in the past.
The technology company which operates in East Africa and Asia told the Committee led by Molo Member of Parliament Kuria Kimani that in the Finance Act 2021, bioethanol was exempted from Value Added Tax (VAT).
Additionally, Finance Act 2023, zero-rated cookstoves which played key part in promoting modern, safe, clean, convenient and affordable alternative to cooking fuel.
"Exempting bioethanol and cookstoves from the Railway Development Levy and the Import Declaration Fee (IDF) by the Finance Act, 2023, had a positive impact on Kenya's transition to clean cooking," the company submitted.
"The net effect of the company was that there was increased bioethanol and cooker sales, as well as creation of employment opportunities for agents and other cadre employees into the country."
The company, which provides bioethanol fuel to over 780,000 Kenyans, noted that this could soon not be feasible.
This is due to Finance Bill 2024, which proposes to introduce an Export and Investment Promotion Levy on denatured ethanol and bioethanol cookstoves at a rate of 3 percent of the customs value.
The Kuria-led committee was urged to exempt bioethanol and bioethanol vapour cookstoves from VAT.
The Committee was further asked to eliminate the proposed Export and Investment Promotion Levy, with the company noting that this would help households transition to clean cooking with bioethanol.
This comes two days after the Kenya Association of Manufacturers (KAM) warned the committee that the levies proposed in the Finance Bill 2024 would make the cost of living unbearable.
Cooking oil is also expected to rise in price should the Finance Bill 2024 be passed unaltered due to a proposed increase in excise duty.
