TAX BURDEN TO MANUFACTURERS

Manufacturer calls on government to ease tax burden

for Manufacturing, which is one of the pillars of President Uhuru Kenyatta’s Big Four Agenda to succeed, government must create a favorable environment for local companies.

In Summary

• Malde said for manufacturing, which is one of the pillars of President Uhuru Kenyatta’s Big Four Agenda to grow, government must create a favorable environment for local companies.

• Malde added that to transport goods to other nations, the government charges 25 per cent duty.

Pwani Oil Products Limited, a leading manufacturer of edible oil and detergents in the country, wants the government to reduce the tax burden on industrialists.

 
 

The firms Commercial Director,  Rajul Malde,  said manufacturers in Kenya are taxed heavily in Kenya.

He said the situation is even worse for companies that export products to the neighbouring East and Central African countries.

Malde said for manufacturing, which is one of the pillars of President Uhuru Kenyatta’s Big Four Agenda to grow, government must create a favorable environment for local companies.

Malde said, whereas in Kenya local manufacturers are charged two per cent on raw material, the neighbouring nations of Tanzania, Uganda and Rwanda do not impose such tax on the local firms.

He said additionally Kenya charges firms 30 per cent for importing plastic bags, other East African Countries do not have such taxes.

The National Environment Management Authority (NEMA) banned plastic bags in August 2017, but allowed manufacturers of consumer products to use them for primary industrial packaging.

“If the government removes these taxes, the cost of products will go down significantly. Currently, consumers have to pay more because of these charges,” he said.

 
 

Malde added that to transport goods to other nations, the government charges 25 per cent duty.

“When our products arrive into the other countries, we are forced to sell them at a higher price because of the huge cost we have incurred. Our competitors from the neighbouring countries are selling their products at relatively low prices because they do not incur huge production costs,” he said.

He said Tanzania, Uganda and Rwanda impose non-tarriff barriers for products from Kenya, whereas the Kenya government allows their products into Kenya without restrictions.

Malde said their export of soap products to Uganda has dropped from four trucks in December last year to two trucks by April this year due to the 25 percent tax o exports

“ We used to make about USD35,000 from one truck. So, we were doing business worth USD140,000 per month, but this has come down to USD70,000,” he said.

Malde said Kenya lacks enough raw material for soap manufacturing.

He said annually the soap-making companies require 60,000 metric tonnes of palm oil used in soap and detergent manufacturing.

However, the locally available oil is only 5,000 metric tonnes annually.

“We are now working with the Kilifi County government and the Kenya Agricultural Research Institute to develop a palm tree breed that takes only one year to mature. The traditional palm tree takes five years to mature,” he said.

He said with enough palm tree for farmers in Kilifi, they will be able to meet the 60,000 metric tonnes of oil needed for manufacturing of detergents.