Manufacturers seek regulations audit to end duplication

NAIROBI - Kenya Association of Manufacturers (KAM) Vice Chairman Rajan Shah said while regulations should create a predictable environment for businesses to thrive, the current set is predatory, allowing the national and the county governments to tax manufacturers at source as well as during delivery of goods across counties.

“We pay levies within host counties while our distributors also pay levies to their host county governments, but ideally we should not be charged a levy for distribution and garbage disposal every time our goods enter a county,” said Shah.

Counties have in the past seven years struggled to raise their own revenue to supplement allocations from the exchequer.

Manufacturers have been easy targets, with counties imposing several fees to allow them to operate in their territories.

To promote competitiveness and a level playing field, KAM has been calling for establishment of a high level government approval process for any regulatory agency (county governments and regulatory agencies) imposing corrective measures touching on businesses.

The industrialists in their Manufacturing Priority Agenda 2020 (MPA2020) launched last March said counties should be discouraged from introducing no-service linked fees, charges and levies.

Besides the double taxation, Shah also said the blanket one percent turnover tax introduced this year by the National Treasury should be differentiated between loss-making firms and those failing to declare profits due to heavy investments.

He said the indiscriminate taxation will hurt those who are investing in the growth of their businesses.

On energy costs, Shah urged the government to adopt a comparative pricing strategy, noting that high costs were hurting the country’s competitiveness in the region.

Ethiopia and Egypt charge manufacturers three cents per kilowatt hour and Uganda 10 cents, while Kenya charges up to 20 cents per kilowatt hour.

“Manufacturers in Kenya cannot therefore compete on equal footing with manufacturers exporting goods to Kenya,” he said.

He said money spent on capital investments ought to be tax deductible, since it creates more jobs and hence new revenue streams for the government.

“The review on 150 per cent investment deduction allowance for upcountry investments has reversed gains made in attracting investors to the counties,” he said. – DAILY NATION, Kenya.