Kenya scraps sales tax on locally manufactured vehicles

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Taxation
Taxation

Kenya’s finance cabinet secretary Ukur Yatani has announced the scrapping of taxation on locally manufactured passenger vehicles in the 2022/2023 financial plan unveiled Thursday.

Yatani said the locally manufactured vehicles would be exempt from the production and the sales taxation to make them much cheaper compared to imported vehicles.

In his taxation measures to finance an expanded public expenditure framework, Yatani said the scrapping of the excise duty on the locally made vehicles would encourage investment in the sector.

The removal of the tax would also encourage competitiveness of the locally manufactured passenger motor vehicles.

Demand for the locally manufactured vehicles has been growing as a result of the easing of the coronavirus pandemic lockdowns.

However, the leading motor vehicle manufacturers in Kenya mostly concentrate on commercial vehicles such as buses, pick-ups and trucks.
The demand for the commercial vehicles rose 80 percent in 2021.

A total of 6,246 new vehicles were manufactured locally in Kenya, according to figures released by the Kenya Motor Industry Association (KMI).

The government has prioritized the implementation of new policies to enhance investment in the manufacturing sector. Enditem

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