NAIROBI, Kenya, Jun 9 – Manufacturers have welcomed the 2016/2017 budget tax measures and incentives ex that they will safeguard local production.
The manufacturers hailed Treasury Cabinet Secretary Henry Rotich for proposing introduction of an additional specific rate of $200 (Sh20,000) per metric tonne for steel and iron imports.
This is bound to uplift the steel sector that has been embattled in recent years due to an increase in cheaper imports from other markets.
“We are encouraged by the progressive steps that have been exhibited by the adoption of some industry recommendations into the budget for the fiscal year 2016/2017. We are hopeful that the Finance Bill has addressed the other key proposals that we made to Treasury – because promoting competitiveness and reducing the cost of doing business is hugely reliant on ensuring that local manufacturers enjoy, in part, fiscal incentives support from government.”
“This is turn would revitalise the Kenya’s exports capability that is needed for the attainment of a double digit economic growth of our Country,” says Kenya Association of Manufacturers Chief Executive Phyllis Wakiaga.
Local aluminium producers also stand to benefit from the proposal to raise import duty from 10 percent to 25percent that seeks to protect locally produced goods.
Further, the proposal to exempt all raw materials used in the manufacture of animal feeds from VAT is also an exciting win for industry.
“This is aimed at strengthening the government’s commitment of transforming the agricultural sector by encouraging local manufacturers to produce high quality feeds at low cost thereby making the business profitable,” Wakiaga says.
Other big wins for the manufacturing sector include pharmaceuticals for which the budget proposes duty exemption on HVAC – Heating, Ventilation and Air-Conditioning System; technical requirement by the World Health Organisation that should be installed at all businesses in this sector.
The importation of these systems, Wakiaga says, have been an additional cost on pharmaceutical manufacturers owing to the duty that was imposed.
She says the budget has addressed pertinent industry issues that will have a positive impact on increasing the ease of doing business for local manufacturers.
“However, earlier pertinent issues highlighted by manufacturers such as VAT refunds, removal of Railway Development Levies and Import Declaration Fees as well Excise Duty on specific products, were not expressly addressed in the Cabinet Secretary’s Speech,” she noted.
Rotich on Wednesday presented his revenue measures to finance the Sh2.3 trillion budget.
Kenya Revenue Authority is expected to collect Sh1.49 trillion in the year under review.