Treasury gives sanitary pads manufacturers shot in the arm

The Treasury has given manufacturers of sanitary pads a shot in the arm with the removal of duty charged on raw materials used in their production.

The Treasury struck out duty on raw materials used for manufacture of sanitary towels in the Finance Bill 2016, signed into law by President Uhuru Kenyatta last week.

Sanitary pads are currently exempt from value added tax (VAT) and also attract zero excise duty but the raw materials used in their manufacture attract VAT at 16 per cent and excise duties of 25 per cent.

Tax manager at Taxwise Africa Consulting LLP, Samuel Njoroge, said the tax had made local production of sanitary pads unfeasible.

“It was easier to manufacture outside the country in Egypt or other countries with incentives and ship the final product in Kenya and actually the EAC without incurring any import taxes,” he said.

Local investment

The tax had effectively given an upper hand to the non-resident manufacturers at the expense of the local producers.

With this amendment, the government has created a level playing field for local manufacturers, which is likely to spur local production of the sanitary towels.

“It is a good step in the government providing affordable sanitary pads to girls, increase local investment, create some jobs and collect more taxes in the form of PAYE (pay-as-you-earn) for the staff hired by the manufacturers and corporation tax on the profits made by the local manufacturers,” said Mr Njoroge.

Lobbyists claim that one in every 10 girls misses school and eventually drops out due to menstruation-related issues.

Figures from the Ministry of Education show that a girl in primary school loses 18 learning weeks out of 108 weeks in a year during her menses.

Within four years of high school, the same girl loses 156 learning days, equivalent to almost 24 weeks of learning.