KTA NEWS & BRIEFS

PRESS STATEMENT:

FINANCE BILL 2021: PROPOSAL TO REMOVE “EXPORTATION OF GOODS OR TAXABLE SERVICES FROM ZERO RATED SCHEDULE AND INCLUDE THEM IN THE EXEMPT SCHEDULE”.

We wish to draw your attention to the above proposal in the 2021 Finance Bill that is to come into effect on 1st July 2021.

If the above proposed amendment comes into effect it will have very serious and adverse impact on the costs of transportation and subsequently cost of Kenyan Manufactured goods exported/transported to the EAC region by Kenyan road and railway transporters.

By listing exportation of goods or taxable services in the exempt schedule the impact is that input VAT claim will be restricted to a proportion of vatable sales over total sales less exempt sales.

Currently, exportation of goods or taxable services are listed under the zero rate schedule and as a result input VAT is claimed in full.

The result of restricting input VAT claim is that the unclaimed VAT amount is added to the cost of the export service.

The EAC countries apart from Kenya have all zero rated exportation of goods or taxable services. This is in line with the standard treatment in the world.

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