Kenya will not raise its value added tax (VAT) to match the uniform rate for the rest of the countries in the East African Community (EAC), the Treasury has said, offering relief to households and businesses.
Treasury Principal Secretary Kamau Thugge said Kenya’s VAT on consumer goods would remain at 16% despite calls to align the rate with the rest of the trading bloc’s members such as Tanzania and Uganda, which charge 18%.
There has been growing concern that different rates at which member countries levy domestic taxes is distorting the EAC common market.
The Treasury’s decision to retain the current VAT rate has spared consumers an increase in the cost of commodities such as electricity, milk, newspapers, textbooks, fertilizers, alcohol, cigarettes, mobile phone handsets and airtime.
Global institutions, including the Washington-based Institute of International Finance (IIF) had tipped the Treasury to raise VAT to 18 per cent as a way of boosting revenues and arrest fiscal deficits that have seen the State take on huge loans. The institute reckons that the increase would be in line with the Treasury’s quest to honor its commitment to the International Monetary Fund (IMF) in narrowing deficits.
Source; Britam Asset Managers