Kenyan manufacturers on Tuesday decried the heavy taxation for their sector that results in a high cost of doing business amidst the economic challenges brought about by the COVID-19 pandemic.
Mucai Kunyiha, chairman, Kenya Association of Manufacturers (KAM) told journalists in Nairobi that the government has introduced excise tax on raw materials and 16 percent value-added tax (VAT) on the supply of some products, effectively increasing the cost of manufacturing and final consumer prices.
“Due to the prevailing tax regime, manufacturers could be forced to restructure and downsize their businesses to stay afloat, which will lead to massive job losses along the extensive supply chains that they support,” Kunyiha told journalists in Nairobi.
According to the manufacturer’s lobby, the sector is already facing challenges due to increased cost of raw materials in the international markets, high sea freight costs, weakening of the shilling and high diesel price.
Kunyiha noted that an unpredictable fiscal regime significantly threatens the Made-in-Kenya goal and gives an upper hand to cheaper imports from other countries.
He observed that the introduction of new tax measures is counterproductive and has acute consequences across all sectors of the economy.
Phyllis Wakiaga, CEO, KAM urged the government to nurture local businesses to increase their productivity, which will in turn naturally increase tax revenues.
Wakiaga said that the national focus should be increasing the number of formal businesses in the country so as to widen the tax base. Enditem
