On Thursday, Cabinet Secretary Henry Rotich will step out to announce 2018/19 budget which will highlight allocations to various state functions. Many Kenyans will be looking forward to how the government will finance projects in this year’s budget. In understanding areas of taxation, Standard Digital engages experts from PricewaterhouseCoopers to shed light on various areas of tax and how it will affect individuals and businesses
Question: Kenyans believe they are the most taxed society yet in East Africa we pay 16 percent VAT compared to our neighbors who pay slightly higher.
Is the complaint justified?
The VAT rate in Uganda, Rwanda and Tanzania is 18 percent.
However, other countries such as South Africa have lower rates of VAT. South Africa has a rate of 15 percent, Nigeria has a rate of 6 percent and Egypt 13 percent. If we compare ourselves to these economies, then our VAT rate is high. To make Kenya more competitive and attract investments and capital, the VAT rate should not be increased but probably reduced to align to economies that are bigger than Kenya’s.
Question: Kenyans are paying dearly (through tax) for utilities like power and fuel which has increased the cost of living.
What is the rationale of taxing basics? This is a way of collecting revenues to fund other government initiatives…for instance, the levies such as WARMA (0.05 cents/KwH); ERC (3 cents/KwH), REP (5 percent of the cost of the units) are used to fund other organizations.
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