The National Treasury is now proposing to increase the country’s Value Added Tax (VAT) from the current 16% to 18%.
The new proposals are in line with the Kenya Kwanza’s plans to cut down the debt crisis in the country come the 2024/25 and 2026/27 financial years.
It has also been viewed as a move towards harmonizing the VAT rate to that of other East African Countries whose rate stands at 18% unlike that in the country.
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Cigarettes both filtered and unfiltered and Alcoholic drinks will also face stiff taxes as a move to raise more revenue and discourage consumption as they propose a health risk and their taxes are not equal to what is charged by the East African Community.
”In order to streamline the taxation of alcoholic products, over the strategy period, the government will review the basis of taxation to the alcoholic content of the product taking into consideration the harmonisation with EAC region.
Given the negative health externalities of these products, the rates will be based on the extent of the externalities of these products as well as recommendations of the ongoing EAC partners states study,” read the proposal