NAIROBI, Kenya, Sept 1 – Kenya Revenue Authority has declared the 16 per cent Value Added Tax on petroleum products will take effect from today clearing the way for an increase of fuel products
Petrol and Diesel Pump prices are expected to increase by 10 percent while Kerosene will increase by 12 percent which will translate to increases in the pump prices to Sh125.21 per litre for Petrol, 112.90 per litre for Diesel and 95.19 per litre for Kerosene.
In a statement, KRA has advised importers, depots, distributors and retailers, including pump stations, to charge, account and submit returns on the same to KRA by 20th of the succeeding month.
“The changes are contained in the Finance Act 2013 which extended the exemption for three (3) years. Further, the exemption was extended by two more years under the Finance Act 2016. Consequently, the VAT charge on petroleum products has now come into effect,” reads a statement from KRA.
Furthermore, KRA says it has instituted measures to support oil industry players in complying with the law.
“We have also engaged the Energy Regulatory Commission in order to ensure coordinated action by relevant Government agencies.”
Parliament had on Wednesday voted to postpone the implementation of the VAT for two more years until 2020, citing the already high cost of living.
However, the coming into effect of the VAT was contained in the Finance Act 2018, with any amendments by parliament needing the President’s approval.
By the time President Kenyatta was leaving for Beijing for the China – Africa Summit on Friday, State House had not indicated the President had signed any pending bills.
But a spot check by Capital FM News shows fuel prices remain unchanged in Nairobi, Kisumu, Machakos, Nakuru and Mombasa with most retailers saying they are yet to receive communication from their head offices or from the Energy Regulatory Commission.
Treasury had factored to collect at least Sh70 billion in the 2018/19 financial year from levying VAT on petroleum products.
“The imposition of VAT on petroleum products is primarily to improve tax collection efficiency and for revenue consideration. VAT is a broad-based tax and should, therefore, have limited exemptions in order to reduce or eliminate revenue leakages in the VAT system.”