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Industry calls for friendlier tax laws

By Peter Theuri | August 16th 2020

Manufacturers have raised concerns on shrinking market share due to what they termed as unpredictable tax measures that are making the industry uncompetitive.

They also said a “derogated” East African Community Common External Tariff (CET) regime has undermined industrialisation efforts in the region.

The concerns were raised during an online forum that was hosted by Kenya Association of Manufacturers (KAM) and Kenya Revenue Authority (KRA) on Thursday, which sought to analyse the impact of 2020 half-year tax proposals on the sector’s economic growth.

KAM Chief Executive Phyllis Wakiaga (pictured) said a healthy manufacturing sector is a prerequisite for the growth and development of the country.

“The role of manufacturing in driving economic growth is particularly crucial today as the country navigates through the Covid-19 pandemic. Critical for this is a stable tax policy,” she said.

“However, some of the measures introduced through the Finance Act 2020 are at the expense of previous tax incentives and benefits that would otherwise form part of the backbone for the post-pandemic economic recovery phase.”

Institute of Economic Affairs Kenya Chief Executive Kwame Owino said tax systems are getting more complex, negating the goals to expand market access.

He cited the need to simplify taxation laws, reduce the administrative burden of Kenya’s tax code and finalise the review of the CET to promote competitiveness of local industries.

Responding to the concerns, KRA Deputy Commissioner for Policy and Tax Advisory Caxton Masudi said the government is keen on developing a comprehensive fiscal policy that enables long-term tax regimes and simplification of tax laws.

He, however, observed that industry should look into non-tax measures to boost consumption.

Private Sector Development Director Stephen Odua, speaking on behalf of Industrialisation Cabinet Secretary Betty Maina, said the government is keen on promoting local manufacturing.

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