A Canadian company operating in Mombasa has announced that it is closing part of its operations following harsh tax conditions.
The firm is the hub for East Africa operations of the overseas packaging manufacturers of corrugated cartons and paper sacks.
In a press statement obtained by Kenyans.co.ke, the packaging company cited that it will be shutting down its Paper Sack Division based in Shimanzi Mombasa County.
The company further cited that it needed to close some of its operations to remain profitable following the implementation of the Finance Act 2023.
“We find ourselves between a rock and a hard place, where we are no longer able to generate sufficient revenues to sustain our operations at PSD. Therefore, effective today we will start issuing redundancy letters to staff currently based at PSD, as we begin to wind down our Coastal operations,” the company's chief officer told staff.
Further, the firm detailed that following the closure of the operations they would have to let go of over 70 members of their staff who had been declared redundant.
The company also cited that the closure of the operations was informed by the need to mitigate potential losses which were occasioned by the increased cost of doing business.
The CEO, while announcing the folding of the operations, detailed that the implementation of the Finance Bill of 2023 played a major role in the creation of a steep taxation regime for the company.
“Unfortunately, each of the job losses has a trickle-down effect on the dependents of the employees, local economies due to reduced purchasing power, and even the government which loses on Pay As You Earn (PAYE) and other taxes. This should have been mitigated,” the CEO noted.
The closure of the firm falls on the backdrop of a warning issued by the Kenya Association of Manufacturers who have cited that their members would flee the country following a harsh business landscape.
According to KAM, if the 2024 Finance Bill is passed as it is, the business landscape in the country may continue to plummet creating more job losses.
“Together with other manufacturers, EAPI has appealed to Parliament and the National Treasury not to pass the Finance Bill 2024 in its current form, but instead to listen to recommendations by the manufacturing sector in Kenya,” read the statement in part.
