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Economy

Manufacturers want tax breaks on warehouses

Job Wanjohi
KAM policy research and advocacy head Job Wanjohi at the briefing in Nairobi on January 28, 2019. PHOTO | SALATON NJAU  

Manufacturers want buyers of warehouses to be shielded from taxation from the fiscal year starting July 1 to lower operating costs for factories and spur uptake of unoccupied property.

In proposals forwarded to the Treasury and National Assembly for consideration in Finance Bill 2020, the Kenya Association of Manufacturers (KAM) is pushing for a 100 percent investment deduction allowance for investors who buy space for manufacturing purposes.

This, if passed, will see manufacturers who buy space for operations deduct cash equivalent of the cost of the property from earnings before taxation.

The proposal seeks to give manufacturers who buy warehouses the same tax incentive enjoyed by those who build new property under the Income Tax Act where investment deduction is 100 percent.

The investment deduction rises to 150 percent of capital expenditure for manufacturers who spent more than Sh200 million on building or machinery outside Nairobi.

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“We are asking for the Income Tax Act to be changed so that it covers both (buyers and developers). Through this, we are able to take up space whereby manufacturing hubs have been closed because of the economic turmoil that the country has been facing,” said Job Wanjohi, head of policy and research at KAM, during pre-budget hearings organised by the Institute of Economic Affairs in Nairobi Tuesday.

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