The players among the losers in the Treasury Kshs. Budget 3.03T – KBC

Cabinet Secretary of the National Treasury Ukur Yatani during the presentation of the 2021/2022 budget to Parliament acknowledged the current challenges of revenue collection due to the effects of COVID-19.

During the next fiscal year which begins on 1st In July 2021, the Kenya Revenue Authority (KRA) is expected to collect ordinary revenue in the amount of Kshs. 1.78 billion to finance the Kshs. 3.03 trillion budget.

The National Treasury expects to generate additional Kshs. 8.7 billion thanks to customs measures agreed by the partner states of the East African Community and the amendments proposed in the 2021 budget bill.

Winners

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CS Yatani, who was aware of the effects of the coronavirus on the overall cost of healthcare, proposed an amendment to the Value Added Tax (VAT) law, which will see drugs used in healthcare facilities, including decongestants and food supplements, exempt from VAT.

“In addition, I propose to grant VAT exemption to diagnostic and laboratory reagents, artificial respirators, including therapeutic breathing apparatus, breathing apparatus, gas masks as well as medical equipment and technologies used in the provision of medical services. I hope that the suppliers of these drugs and medical equipment will reciprocate by making their prices affordable, ”said CS Yatani.

While a new variant of covid is still lurking in the country, CS Yatani has eased the pressure on pharmaceutical manufacturers who will now benefit from exemptions on inputs used in the manufacture of medical ventilators and respiratory devices in order to ” improve access for patients with complications from covid.

Mining and exploration companies will also benefit from VAT exemptions on VAT goods used exclusively in geothermal or petroleum exploration and mining prospects which the government planned to expand in the mining and mining sector. exploration.

“Mr. President, to stimulate Kenya’s green energy effort, I propose to exempt from VAT equipment intended for the production of solar and wind energy.

Power producers who had signed power purchase agreements with the government before April 2020 will also continue to benefit from VAT exemptions on taxable goods until the projects are finalized.

Real Estate Investment Trusts (REITs) Developers who transfer their developments such as affordable housing and special projects such as student hostels will also benefit from VAT exemptions to deepen capital markets by encouraging investors to participate in REITs.

Manufacturers of masks, disinfectants, ventilators and personal protective equipment will also benefit from duty-free importation of raw materials and inputs for another year to support the fight against COVID-19.

Parents of newborns will also continue to enjoy affordable baby diapers as the cash flow is extended by one year, duty free on inputs used to make baby diapers under the duty remission program, a measure that should also increase manufacturing output.

Last year, we gave manufacturers access to inputs for the manufacture of baby diapers duty free, under the duty remission program.

Imported roofing tiles will also get a duty-free rebate as the government seeks to support the affordable housing program.

Losers

While the betting craze was brought under control by the health pandemic, the Treasury noted the effects of gambling on society and proposed to reintroduce excise duties on betting at the rate of 20% of the amount wagered.

Importers of potatoes, peas, tomatoes, among others, will also be required to pay a 30% tariff rate for one year to protect local farmers from cheap imports.

Other imported steel products will continue to be subject to a 25% tariff rate with the corresponding specific rates for an additional year.

Import duties on imported products for the manufacture of leather products and footwear were also maintained at the rate of 25 percent to curb cheap import competition and undervaluation.

Local furniture manufacturers were also protected from cheapness, as EAC partner states agreed to extend the applicable import duties on furniture at the rate of 35% for an additional year.

To further fund the budget, the digital services tax which is paid at the rate of 1% of gross revenue has also been extended to include revenue from the Internet and electronic network.

The Treasury also aims to encourage unregistered people to join the National Health Insurance Fund by amending the Income Tax Law to allow contributions to the National Health Insurance Fund to benefit from tax relief. at the rate of 15% of the amount contributed.

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