Transport and logistic companies face higher taxes on imported trucks, lorries and trailers in the new financial year, which could impact their service costs if Parliament passes a proposal by the National Treasury.
The National Treasury has proposed increasing customs duty on imported prime movers and trailers from the current East African Community’s (EAC) external tariff of 10 percent to 25 percent and 35 percent, respectively.
This means that newly imported trucks and trailers will cost transporters higher in Kenya than in neighbouring East African countries, a move that the Treasury says will help protect firms assembling the heavy vehicles locally.
“The local assembly of automotive continues to facilitate job creation with positive ripple effects in other supportive sectors especially in the manufacturing of spare parts,” Treasury Cabinet Secretary Njuguna Ndungu told Parliament in his budget speech last Thursday.
In a similar move to protect the local manufacturing industry, the EAC region has extended the duty-free importation of raw materials and parts used in assembling motorcycles.
Kenya has also been granted a duty remission on imported raw materials and parts used in the assembly of mobile phones to help boost the country’s ICT sector and local electronic production.
Additionally, Kenya will continue to tax imported iron and steel products, which are currently taxed at between zero to 10 percent by the EAC partner States, a higher rate of 25 percent to protect the local manufacturing of these products.
Imported textiles and related products, also taxed by the EAC common tariffs at zero to 10 percent, will now be taxed at 35 percent in Kenya for the first time, a step taken to protect the country’s budding textile industry.
The EAC finance ministers met last month for pre-budget consultations done every year, where they ratified the various requests for Kenya to impose customs duty above or below the common tariff charged under the EAC common customs.
On the flip side, the region’s ministers allowed Kenya another year of duty remission on rice and wheat imports, a move to help stabilise local food prices and boost food security.
Rice, which EAC countries tax at the higher of 75 percent or $345 (Sh44,332) per tonne, will be imported into Kenya at a duty rate of 35 percent or $200 (Sh25,700) per tonne. Wheat will be imported at 10 percent, instead of the EAC’s 35 percent.
