In a bold move aimed at bolstering its domestic manufacturing sector, Kenya has introduced an Eco Levy on imported finished products while exempting locally manufactured goods from the new tax. The announcement, made by Kuria Kimani, Chair of the Finance Committee in the National Assembly, marks a significant shift in the country’s economic strategy towards fostering self-reliance and reducing reliance on imports.
The Eco Levy targets a range of imported items including sanitary towels, diapers, phones, computers, tyres, and motorcycles. These products, often sourced from abroad, will now face additional charges upon entry into Kenya. In contrast, goods produced within the country will be spared from this levy, incentivizing local production and assembly.
“This initiative is crucial for enhancing Kenya’s manufacturing capacity, generating employment opportunities, and conserving foreign exchange reserves,” Kimani emphasized during the announcement. The move is expected to stimulate growth in local industries by making their products more competitive in the market while simultaneously curbing the influx of foreign-made goods.
In addition to the Eco Levy implementation, the Finance Committee has also adjusted other tax policies to support economic growth and alleviate consumer burdens. The 16 percent Value Added Tax (VAT) on bread has been removed, a decision aimed at ensuring essential food items remain affordable for Kenyan consumers. Similarly, VAT exemptions have been extended to the transportation of sugar, financial services, and foreign exchange transactions, aiming to streamline financial operations and reduce costs.
Furthermore, the committee has scrapped the 2.5 percent Motor Vehicle Tax and excise duties on vegetable oil, signaling a broader effort to ease financial pressures on various sectors of the economy.
The comprehensive tax adjustments and the introduction of the Eco Levy underscore Kenya’s commitment to fostering a resilient and self-sustaining economy. By promoting local manufacturing and refining its tax policies, the country aims to achieve sustainable growth while safeguarding its economic interests in an increasingly competitive global market.
