September 1, 2018 / 1:09 PM / 8 months ago

Kenya imposes 16 pct VAT on petroleum products, defying lawmakers

NAIROBI, Sept 1 (Reuters) - Kenyans will pay a 16 percent value added tax on all petroleum products from Saturday, the revenue authority said, a move that defies a parliamentary vote to delay the tax for two years.

Kenyan lawmakers on Thursday voted to delay the tax, which had already been postponed several times, citing the high cost of living. That was seen as a blow to government efforts to raise revenues through higher taxes.

But the revenue authority said in a statement that it was proceeding based on previously approved budget bills.

“Kenya Revenue Authority informs the general public, oil marketers, resellers and retailers that VAT will be charged on all petroleum products at a rate of 16 percent on all transactions with effect from Sept. 1, 2018,” it said.

To become law, the bill on delaying the tax that was passed in parliament still needs approval by President Uhuru Kenyatta.

Analysts had said on Thursday that Kenya’s fiscal deficit was likely to be higher than projected after parliament rejected most of the tax measures proposed by the government for the 2018 budget.

Kenya’s legislature also rejected a “Robin Hood” tax of 0.05 percent on bank transfers of over 500,000 shillings ($5,000) and an employee contribution scheme towards the national housing development fund.

The rejected tax hikes were designed to fund a range of government development goals including universal healthcare and affordable housing.

KRA said it had advised importers, depots, distributors and retailers, including roadside fuel stations, to charge, account and submit returns on a monthly basis.

“KRA has instituted measures to support oil industry players in complying with the law. We have also engaged the Energy Regulatory Commission in order to ensure coordinated action by relevant government agencies,” it said. (Reporting by Omar Mohammed Editing by Ingrid Melander and Edmund Blair)

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