The Kenya Private Sector Alliance (KEPSA) revealed that it had reached a consensus with President William Ruto's administration on some contentious tax proposals in the Finance Bill 2024.
In a statement, the major players in the business and manufacturing sector revealed that resolutions were reached following a meeting at the State House on June 12, 2024, with key strides made on Eco Levy and the Motor Vehicle Tax.
For starters, KEPSA revealed that the government agreed to their proposal on the exemption of some locally assembled vehicles from the imposition of Excise Duty,
As detailed by the private sector, specialised vehicles used in the tourism industry such as Landcruisers will be exempt from the tax.
This move is aimed at boosting the tourism sector which is one of the top sectors that support the economy.
On the other hand, the Motor Vehicle Tax for commercial and agricultural vehicles will be reviewed. Initially, the business players wanted the two categories of vehicles exempted from the tax.
The group acknowledged that the tax would increase the cost of doing business.
However, after the deliberations, it was agreed that the government would develop clusters for the two vehicles.
"The way forward is to have different calibrations for the different clusters of motor vehicles, especially for the commercial & agricultural," read the statement in part.
Further, the business community raised concerns over the imposition of 25 per cent Excise Duty on crude palm oil and finished cooking oil.
While the government maintained that the move was aimed at enhancing local production, the meeting resolved to review the taxation proposals based on a verification exercise that will be undertaken in due course.
"Verification of the Crude Palm Oil (CPO) value addition threshold of 98 per cent is to be undertaken to determine how much exercise duty will be imposed on the CPO," KEPSA stated.
On the other hand, the meeting also resolved to restrict the Eco Levy to imported products.
"The way forward is to Review the impact on products that are locally manufactured. Restrict imported products. For the locally manufactured finished products, the Extended Producer Responsibility (EPR) will be applicable," KEPSA added.
Notably, other tax concerns will be discussed with various government institutions on a way forward.
Some of the attendees of the meeting were the Kenya Association of Manufacturers (KAM), Kenya Bankers Association (KBA), Boda Boda Association of KENYA, and Pubs Entertainment & Restaurants Association of Kenya (PERAK) among others.
