Sunday, May 12, 2024 –Government has listed some of the basics commodities and a few other essentials among the tax exempted items for Kenyans.
In the Finance Bill 2024, it is proposed that some products as well as services will move from zero rated to tax exempted as a way of reducing the cost of living
Our check established that many of the items that are now exempt were zero-rated in the 2023 Finance Act.
Basic terms describe zero rated as a way of allowing suppliers not to pay taxes for the products supplied but still being able to claim value-added tax (VAT) paid on inputs while in exemption there is no taxation but also no claim of refund for the VAT on inputs.
This move therefore mean Kenya Kwanza administration is also playing its revenue collection cards so closely so that to raise the figure in the next financial year.
“All inputs and raw materials whether produced locally or imported, supplied to manufacturers of agricultural pest control products upon recommendation by the Cabinet Secretary for the time being responsible for agriculture,” the Finance Bill further stated on the proposal to move products from zero-rated to exempt”.
Goods and services that were zero-rated but are now exempted include; The supply of motorcycles of tariff heading 8711.60.00, and the supply of ordinary bread,
Furthermore, milk and cream, not concentrated nor containing added sugar or other sweetening matter has been moved from zero-rated to exempted.
Agricultural pest control, the supply of maize (corn) flour, cassava flour, wheat or meslin flour, and maize flour containing cassava flour by more than 10 per cent weight and inbound international sea freight offered by a registered person also fall under this category.
While moving from zero-rated to exempt does not necessarily guarantee the reduction of prices, the Kenya Kwanza has proposed further exemption of goods micronutrient foliar feeds and bio-stimulants, tea packaging material as well mosquito repellents.
It should be noted that the supply of denatured ethanol, plain polythene film, and pressure-sensitive adhesive will no longer be exempted from tax.
Nolonger exempted are services imported or produced locally for use by the local film producers or local film agents upon recommendation by the Kenya Film Commission KFC, subject to approval by the Cabinet Secretary for the National Treasury.
