Cargo transporters in Kenya have asked the government to suspend next month’s planned implementation of the 16 per cent VAT on petroleum products as this will increase the cost of doing business.
Through the lobby group Kenya Transporters Association (KTA), cargo firms and transporters say the proposed introduction of the tax will price out Kenyan firms in the regional market.
“The road transport industry is open for competition in the East Africa Region member countries and if other member countries have not introduced VAT on their petroleum products, Kenyan transporters will be disadvantaged,” said KTA in a statement.
KTA further says the tax will heighten liquidity pressures for firms that are currently owed VAT refunds from the Kenya Revenue Authority, KRA dating back more than two years.
The lobby argues that the existence of the subsidized Standard Gauge Railway, SGR will make it difficult for operators to recoup the price increase from the tax through re-pricing their services.
“Without specific timeframe for this refund, many transporters will be forced to close shop owing to the strain on working capital that will be held by the government in the form of refundable VAT,” explained the lobby in part.