Industrialisation Ministry pushes for tax cuts on raw materials

Industrialisation and Trade Cabinet Secretary Adan Mohamed

The Industrialisation ministry is in talks with Treasury to zero-rate the Import Declaration Fee (IDF) and the Railway Development Levy (RDL) on imported raw materials. 

The move is aimed at making locally produced goods compete favourably with those from other countries.

Speaking during the launch of the Kenya Association of Manufacturers’ Manufacturing Priority Agenda (MPA) 2018, Industrialisation and Trade Cabinet Secretary Adan Mohamed said the plan would be implemented in the coming months.

“A plan that we are working on with our colleagues in Treasury is to actually charge zero IDF and RDL on raw materials to start with, but then we load that revenue shortfall on the raw materials into the finished goods,” he said.

The government currently charges a 1.5 per cent levy on the value of imported goods as RDL, while the import declaration fee is 2.5 per cent.

Mr Mohamed said the government is also working on improving ports and fast-tracking VAT refunds.

WEALTH GENERATION

The association’s chairperson Flora Mutahi praised the government’s move, saying the manufacturing sector is the muscle behind productive employment and opportunities for wealth generation with direct linkages to all sector of the economy.

“We applaud the government’s renewed commitment to the sector. It is thus a year to give the manufacturing sector the much deserved attention in terms of policy direction and investments,” she said.

“As an industry, we aim to contribute 15 per cent to the economy with the hope of creating more jobs and are keen to see manufacturing centralised in our national vision.”

The MPA has spelt out key agenda that, when fixed, would result in industrial growth. They include competitiveness and level playing field, export-driven manufacturing, pro-industry policy and institutional framework, government-driven SMEs development and securing the future of the manufacturing industry.

“For us to achieve the intended growth of GDP contribution from the current 9.2 per cent to 15 per cent by 2025, urgent steps need to be taken, the results of which should be tangible in the next one year” said Ms Mutahi.