NAIROBI (Xinhua) --
Kenya’s tax collector insisted on
Saturday that the 16 percent fuel tax will be implemented
despite a vote on Thursday by Parliamentarians to delay its
implementation by two years.
The Kenya Revenue
Authority (KRA) told members of the public, oil marketers,
resellers and retailers that that the value added tax (VAT) will
be charged on all petroleum products at a rate of 16 percent on
all transactions with effect from Sept. 1.
"The changes are contained in the Finance Act 2013 which
extended the exemption for three 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," the KRA said in a statement issued in
The lawmakers on Thursday voted to delay the introduction of
16 per cent tax on petroleum products to 2020, saying it might
have a major impact on the economy.
The legislators said the amendment was meant to cushion
Kenyans from the high cost of living as prices of basic
commodities including transport fares were to rise.
The tax was first introduced on petrol, diesel, kerosene and
jet fuel in the VAT Act of 2013, with a three-year grace period.
In a statement, KRA 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
"KRA 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," it said.
Industry and consumer lobby groups had warned that the tax
would set off sharp price increases and stall overall economic
Motorists had earlier indicated that they would increase
fares by 20 percent starting Sept. 1.
The Consumers Federation of Kenya and Kenyan private sector
players also raised concerns that an increase in fuel prices
would result in a hike on consumer price.
"Fuel products are part of Kenya’s most taxed commodities.
The tax measures are on the back of a push by the
International Monetary Fund (IMF) to enable the government to
raise more revenue to curb mounting debt following increased
domestic and external borrowing.
The measure was among the conditions given to Kenya by IMF in
2015 when it offered the East African nation 1.5 billion U.S.
dollars standby loan.
The fuel price hike, therefore, sets up the East African
nation’s residents to higher inflation.
Goods and services whose prices are set to rise include
electricity, transport, all manufactured products like milk,
bread and cooking fat, and all agricultural produce.
Cash-strapped Kenya treasury exceed Domestic borrowing