Manufacturers want the National Treasury to suspend the implementation of the 16 per cent value added tax on pest control products.
In a letter to Cabinet Secretary Henry Rotich, the Kenya Association of Manufacturers (KAM) asked that the implementation of the new tax that came into force on July 1 be put on hold until certain issues were addressed.
“The purpose of this letter is to, therefore, bring to your attention the above concerns and request consideration of deferment of the implementation date of July 1, 2018, pending discussion and direction on matters, raised,” said the manufacturers’ lobby even as they requested a meeting with the CS.
President Uhuru Kenyatta on July 18 signed the Tax Laws (Amendment) Act, 2018, removing agricultural pest control products from the list of products that are zero-rated.
This means that manufacturers will have to factor in a 16 per cent consumption tax on pest control products.
However, KAM insisted that not only will the new tax affect the cost of food in the country, but it also complicates issues that need to be addressed before it is rolled out. The lobby said it was afraid that the law would be applied retroactively as President Uhuru Kenyatta only assented to it on July 18, more than two weeks after the effective date of July 1.
“The Tax law (Amendment) Act, 2018 provides for an effective date of July 1, 2018 on all provisions relating to the valued added tax. The time period, therefore, affects agricultural pest control products which are deleted as item 17 under the second schedule of the Valued Added Tax Act,” said KAM in the letter to Mr Rotich.
KAM added that it was not until August 1 that most pesticide manufacturers were able to see the law.