Manufacturers propose zero taxation on raw materials in Finance Bill

The Kenya Association of Manufacturers (KAM) is advocating for an amendment to the Finance Bill, 2024 to introduce zero taxation on raw materials.
During an interview on Spice FM on Wednesday, May 22, the Association's Chief Executive Officer Anthony Mwangi, highlighted the adverse impact of taxing raw materials on production in various sectors, including cement and cooking oil.
The KAM boss indicated concerns about the doubling of cooking oil costs due to the addition of excise duty on the raw material (crude palm oil), coupled with the inability to recover the excise when selling the product.
"We used to be exporters of steel but now we are not. The cost of cooking oil is going to double because exercise duty has been added to the raw material (crude palm oil) and then you put excise which you cannot recover when you sell your product," he implied.
According to the recently released report by the Kenya National Bureau of Statistics (KNBS), cement production in the country decreased by 100,000 metric tons.
Mwangi attributed this decline to government levies and certain moratoriums.
He also identified the paper and packaging industry as one likely to be affected by the Finance Bill.
He expressed that while the government is encouraging investment, internal levies are increasing product costs.
He praised the previous administration's strategy of differentiating the Import Declaration Fee (IDF) for raw materials and finished goods, which facilitated growth in the manufacturing sector.
"The wisdom in the previous government was they differentiated IDF for raw materials and finished goods but in 2023 they bundled them together," he added.
Moving the levy from two percent to three percent, Mwangi argued, would make the country less competitive compared to neighboring countries without IDF.
He emphasized Africa's manufacturing potential and the necessity of a sound structure to harness it.
The Association's CEO also voiced concerns that if the bill is enacted, it would impede further collaborations with other countries.