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Tough Times for Kenyans as Treasury seeks an Increase in VAT

Post by : Ann Njambuya

The Treasury building in Nairobi

Kenyans can now brace for hard times if a Draft National tax  policy document is adopted. In the document the treasury is seeking to set the minimum amount of VAT charged on petroleum products to be at least 12%. Currently most goods in the country are charged a VAT of 16% with petroleum products being charged at 8%.

If this draft is adopted the minimum chargeable value added tax will be pegged at 12%. This means that the government will collect more from the oil marketers who will in return charge more to Kenyans.

The treasury is also seeking to have the tax law only changed after 5 years instead of the yearly review. Each year parliament amends the tax laws in the country. During this year parliament halved the vat charged on Cooking gas which was being charged at 16%.

This has in return made the valuable commodity much cheap and more affordable to an increased number of households. Treasury introduced a 16% vat charge on cooking gas during the financial year 2021/2022, which saw the sharp hike in prices of the precious commodity.

International partners 

Kenya has been in talks with the IMF in concerns of borrowing additional funds. The IMF on its part insists that Kenya must charge a VAT rate of 16% on petroleum products in a bid to control public borrowing. Kenya introduced VAT charges on Petroleum products in 2018 at 16% but later halved it 8% percent. This was a condition issued by the International Monetary Fund.

The Treasury building in Nairobi
Photo//The Treasury building in Nairobi. the Yatani led ministry is seeking to have VAT increased from a minimum of 8% to a minimum of 12%. 

The halving of the vat on petroleum products was effected after uproar from citizens, Motorists and business lobbyists. Currently there is a shortage of Crude oil in the world in relation to the ongoing Russian war in Ukraine. for Regional Domination as Mtongwe Shipyard is Complete

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