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KAM: Kenyan plastic bag companies suffer from tax rise

by ChemOrbis Editorial Team -
  • 04/08/2016 (17:40)
According to media reports, after Kenya’s National Treasury disregarded a proposal to lessen the excise tax on packaging products under the Excise Act 2015, enforced on December 1, 2015; manufacturers have warned of an impending closure of plastic bag factories.

Kenya Association of Manufacturers (KAM) chief executive Phyllis Wakiaga stated that the lobby made a suggestion to the Treasury regarding reducing by half or zero-rating the products from the Sh120 per kilogram of plastic shopping bags, which is charged on one tariff line. He added that instead two more tariffs were added and that many companies have stopped their business since production costs don’t match prices.

The amendment to the Excise Act which came into force June 9 caused many plastic bag companies to stop or slow their production recently after the new tariffs increased their production costs by around 50%. The excise duty is not applicable to vacuum bags for packing foods, juices, tea and coffee.

KAM has also warned that the proposal to remove the specific rate of duty on motor vehicles and charge a 20% ad valorem tax rate may harm local assemblers. The excise duty on motor vehicles which was introduced last year was based on the age of the vehicles which puts higher duties for older cars. Wakiaga argued that this duty system will make locally-assembled vehicles uncompetitive against import cars in the market.
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