NAIROBI, Kenya, June 9 – The Kenya Association of Manufacturers (KAM) has warned that proposed tax changes in the Finance Bill 2026 could increase the cost of electric motorcycles, mobile phones and other key products by raising production expenses for local manufacturers.
KAM said the proposal to shift several products from VAT zero-rated status to VAT-exempt status would make it difficult for manufacturers to recover input taxes, ultimately pushing up consumer prices.
The affected products include electric motorcycles, mobile phones, animal feed inputs, solar equipment, lithium-ion batteries and bioethanol vapor stoves.
Under the current zero-rated regime, manufacturers can claim refunds on VAT paid for production inputs, helping lower overall production costs. However, under a VAT-exempt regime, firms would be unable to recover input VAT despite not charging VAT on final products.
According to KAM, the change would increase manufacturing costs and undermine efforts to promote affordable clean energy technologies and locally produced digital devices.
“KAM proposes to keep these products zero-rated, allowing manufacturers to recover input VAT, reduce costs and keep clean energy solutions and locally manufactured technology affordable,” the association said in a statement.
The lobby further argued that the proposal could slow Kenya’s transition to green energy by making electric mobility and renewable energy technologies more expensive for consumers.
“With an enabling VAT regime, Kenya can strengthen industry, support innovation and accelerate Kenya’s green future,” KAM added.
The concerns come as Parliament reviews the Finance Bill 2026, which seeks to adjust tax measures and broaden revenue collection while supporting fiscal consolidation efforts.
Industry players have urged lawmakers to retain the zero-rated status for the affected products, arguing that the move would protect investments in manufacturing, support local innovation and enhance access to affordable clean energy solutions.
