Kenya faces new EAC tax pain amid uproar at home

East African Community headquarters

 Hawkers trading their merchandise on pedestrians walk paths along riverside drive Nairobi on Sunday, April 7, 2024. 

Photo credit: File | Nation Media Group

Kenya could be pressured to withdraw new taxes imposed on various items by the East African Community (EAC) following the withdrawal of the controversial Finance Bill 2024, the regional private sector lobby has said.

Aweek after President William Ruto withdrew the Finance Bill 2024, EAC gazetted taxes under the common external tariff (CET) came into force, reversing the gains made by the shelving.

The Gazette notice dated June 30 and signed by EAC Council of Ministers chairperson Deng Alor Kuol, approved Kenya’s application to raise duty on crude palm oil to 10 percent from the current zero rate under the common external tariff (CET)—setting the stage for a rise in the prices of cooking oil, soap, margarine, and some cosmetics with glycerin by double-digit rates from this month.

The move has sparked concerns that Kenya was introducing the rejected taxes through the back door.

The East African Business Council (EABC) said Kenya may be pressured to seek a stay on the new EAC taxes to appease its financially strained citizens.

“Kenya could be allowed to apply for a stay of application taking in demands from the people. This is because the taxes are retrogressive in nature. It is allowed and provided for in the EAC Treaty,” John Kalisa, chief executive officer at the EABC said.

“Given that it has been gazette and agreed upon by the EAC Council of ministers, it will have an impact on Kenya and may have a distortionary effect on business. It will have an impact on revenue. As it implies that Kenya will be applying at a different rate from that of other partners,” he added.

The increased duty on crude palm oil, harvested from oil palm trees, forms part of a few options left for the Ruto administration to raise new and higher taxes after the government was forced to drop the Finance Bill 2024 following deadly youth-led protests.

Other goods targeted are semi-trailer trucks whose duty has now been raised from 25 percent to 35 percent.

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