No.

Goods description

Current VAT rate

Proposed VAT rate as per Bill

Implication

1

Taxable supplies imported or purchased for exclusive use in the construction of a hotel or conference facility by any licensed Special Economic Zone (SEZ) entity

16%

Exempt

Development costs are likely to be reduced.

2

Taxable supplies imported or purchased for exclusive use in the construction of a minimum of 5,000 housing units by a licensed SEZ entity

16%

Exempt

Whereas the supply of residential housing is an exempt supply, Construction material is vatable at standard rate of 16%. Thus exempting construction material from VAT will eliminate the non-deductible VAT currently borne by developers thus lowering the cost of housing in Kenya. The move will make housing affordable to many. On the other hand, construction materials suppliers will not be able to claim input tax credits a move that may result into an increase in the cost of such materials.

3

The transfer of a business as a going concern by a registered person to another registered person

0%

Exempt

Parties to the transfer will not be able to claim input VAT related to the transfer, for instance, legal fees, etc. for the VAT incurred.

4

The supply of natural water, excluding bottled water by a National Government, County Government, any political sub-division thereof or approved persons

0%

Exempt

Any VAT incurred by the a?ected suppliers of natural water will not be claimable as input tax. This cost will be borne by the final consumers through a higher cost.

5

Safety or protective articles of apparel, clothing accessories and equipment for use in registered hospitals and clinics or by county government or local authorities in firefighting

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in the making of such supplies. This move may result in an increase in the cost of such items.

6

Taxable goods supplied to marine fisheries and fish processors

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in making of such supplies which is expected to be passed on to the ?sheries and ?sh processors.

Effectively, this means the final consumer bears the additional cost/price. This move will impact efforts to improve the blue economy.

7

Certain medications and approved inputs or raw materials (either produced locally or imported) supplied to pharmaceutical manufacturers in Kenya for manufacturing medications

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in making of such supplies. Importers and local producers of these raw materials will be forced to pass on their non-recoverable costs to the manufacturers leading to an increase in production cost and ultimately the end product.

8

Supply of liquefied petroleum gas

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in making of such supplies. This cost will be borne by the final consumers – a move that may impact gains made towards the use of clean energy.

9

Milk and cream, not concentrated nor containing added sugar or other sweetening matter

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in making of such supplies. This cost will be borne by the final consumers.

Reverting to exemption of these basic commodities a year later after they had been zero-rated will lead to an increase in their prices rendering them less a?ordable to the ordinary Citizens.

10

The supply of maize (corn) flour, ordinary bread and cassava flour, wheat or meslin flour and maize flour containing cassava flour by more than 10% in weight

0%

Exempt

Reverting to exemption of these basic commodities a year later after they had been zero-rated will lead to an increase in their prices rendering them less a?ordable to ordinary Citizens.

11

Agricultural pest control products

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in the making of such supplies. This additional cost will be borne by the final consumers.

12

Qualifying imported passenger baggage including unaccompanied baggage

0%

Exempt

The change is unlikely to have any adverse impact on this category of persons.

13

Taxable goods for emergency relief purposes for use in specific areas and within a specified period supplied to or imported by the Government or its approved agent, a non-governmental organization or a relief agency

0%

Exempt

Suppliers of the a?ected supplies will not be able to claim any input tax incurred in making of such supplies. This cost will be borne by the final consumers as a higher cost/price.