Finance Bill 2023: Achieving Tax Uniformity Through VAT Adjustment
The National Treasury appears determined to push through the proposed increase in the value-added tax (VAT) on fuel products, despite the public outcry.
Treasury Cabinet Secretary Njuguna Ndung’u states that the adjustments that will increase the value-added tax on petroleum products from 8% to 16%. Are intended to achieve tax uniformity in both the local and East African markets.
The Cabinet Secretary was speaking at the Port of Mombasa. Where he was with his counterpart from the Ministry of Energy and Petroleum, Davis Chirchir. To receive the second shipment of fuel from the United Arab Emirates.
A portion of Kenyans are opposed to the Finance Bill 2023’s proposal. To increase the value-added tax (VAT) on petroleum products from the current 8% to 16% to increase revenue.
In the midst of a soaring cost of living. The decision to increase fuel prices by as much as Ksh.10 has sparked outrage.
Despite the uproar, Cabinet Secretary Ndung’u asserts that the government will adjust the VAT. To achieve tax uniformity on both the local and regional markets.
“By the way, we discovered that Kenya has the lowest VAT in the region; other countries have much higher rates than 16%,” he said.
“However, we have the ambition to rationalize all taxes in the future, and massive studies have revealed how the market structure functions. However, we are aware of what the East African market is doing, and we must encourage them to rationalize their taxes as well.”
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However, CS Ndung’u affirmed that the government will not reach a final decision. On the proposal until there has been adequate public participation.
“The budget proposals that will be presented will be based on the results of the public participation in terms of the responses and their fundamental proposals,” explained CS Ndung’u.
The shipment is being received after the Kenyan government signed a government-to-government agreement. For the supply of automotive gas oil and Jet A-1 with UAE’s Abu Dhabi National Oil Corporation (ADNOC) Global Trading.
According to CS Chirchir, the initiative will help stabilize the shilling in the country.
“The G2G is operational. The Kenyan shilling is gradually gaining strength, which was the intended result of the G2G.
“The G2G was essentially the government providing support to the oil market by stating that we will support the various LCs for six months, after which they will start maturing monthly and we will put the dollar to offset the LCs,” Chirchir explained.
As part of its investment in storage facilities to support the project. The government intends to resurrect the Kenya Petroleum Refineries Limited in Changamwe.
“Currently, we have contracted 200 tank firms, 200 kT tank firm KPRL, to supplement the traditional Kenya pipeline tank firms. We are bringing in an additional 100,000 metric tonnes by the end of the year, and another 100,000 tonnes are coming on board,” he added.
Six ships have docked at the port of Mombasa, according to CS Chirchir, who is optimistic about achieving stability in the fuel sector.
Finance Bill 2023: Achieving Tax Uniformity Through VAT Adjustment
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