Sugar millers, the primary producers of denatured ethanol, have been handed a boost after the government zero-rated the product to shield them from cheaper imports.
Denatured alcohol is one into which a substance has been added, making the mixture unfit for human use.
It has a wide array of domestic and industrial uses including as a disinfectant, solvent, cleaning agent, fuel, and in printmaking.
Zero-rated goods are products that are exempt from value-added taxation.
Often, products and services in this category are those that are deemed vital, such as food items, sanitary products, and animal feeds. Zero-rating makes them more affordable for lower-income consumers.
The decision by the State to zero-rate ethanol will enable manufacturers to claim input VAT, thus reducing the cost of making the product, and handing factories a boost against cheap imports.
On Wednesday, President William Ruto signed into law the Statute Law (Miscellaneous Amendments) Bill, 2024, which amends the VAT Act, 2013 to add denatured ethanol to the list of zero-rated products.
“This creates an economic safety net and competitive edge for local denatured ethanol manufacturers, particularly millers and sugar manufacturers, who face challenges with cheaper imports,” said a despatch from State House.
Spectre International, which is based in Kisumu, is the largest ethanol maker in the country with a capacity to produce 27 million litres.
It is followed by Mumias which has a 22 million litres capacity, the State-owned Agrochemicals and Food Company (18 million litres), Kibos Sugar and Allied Industries (10 million litres), and Kwale International Sugar Company (Kiscol) (six million litres).
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