The Kenya Association of Manufacturers (KAM) has urged Members of Parliament to review taxes imposed on paper-based packaging materials, arguing that the measures are increasing production costs and could undermine the country’s export competitiveness.
In submissions on the Finance Bill 2026, KAM said paper-based packaging, including corrugated cartons and kraft paper sacks, remains critical for packaging and exporting key agricultural products such as flowers, avocados, vegetables and tea.
According to the manufacturers’ lobby, local packaging producers are facing rising costs due to taxes imposed on imported raw materials, particularly kraftliner, which is used in the manufacture of packaging materials but is not produced locally.
KAM noted that under the Finance Act 2025, the government introduced an excise duty of either 25 per cent or Sh50 per kilogram, whichever is higher, on kraft paper.
The association said that, together with other levies and taxes, the cumulative tax burden on kraft paper has risen significantly over the past three years.
It further argued that the higher costs have contributed to increased prices for locally manufactured packaging, making imported finished packaging products more attractive and reducing the competitiveness of domestic manufacturers.
KAM said local paper packaging manufacturers are currently operating below capacity, with utilisation rates at 33 per cent for bags and balers and 55 per cent for corrugated cartons. It also claimed that imports of finished packaging materials have increased, while three paper-converting plants have closed over the last three years, resulting in job losses.
The lobby group further said the additional taxes have pushed up packaging costs for exporters. It cited examples showing that the cost of a standard flower box has increased from Sh197 to Sh247, while avocado export boxes have also recorded significant price increases.
Industry players warn that higher packaging costs could make Kenyan exports less competitive in international markets, particularly against producers from countries with lower production costs.
To address the concerns, KAM is proposing the removal of the 10 per cent Export and Investment Promotion Levy (EIPL) on kraft paper products and the scrapping of the excise duty imposed on imported kraftliner.
The association argues that the proposed changes would lower production costs, support local manufacturing, protect jobs and enhance the competitiveness of Kenyan exports.
The proposals will now be considered as part of the ongoing public participation process on the Finance Bill 2026 before Parliament determines the tax measures.
