The cost of various goods and services is expected to rise after the tax on the purchase price introduced during the budget took effect yesterday.
The Value Added Tax Act 2013, signed into law by President Uhuru Kenyatta on August 14, subjects items that were previously tax zero-rated or exempt to a standard levy of 16 per cent.
Yesterday's commencement date was gazetted by the National Treasury last Friday.
The resulting price changes are likely to exert more pressure on overall inflation rate that has been rising in the recent months and stood at 6.67 per cent last month.
Items whose prices are expected to be affected most include processed milk, cooking gas, electricity, exercise and text books, mobile phones, animal feeds and filming materials.
A half litre packet of fresh milk that presently retailed at between Sh45 and Sh48 is, for example, set to shoot to between Sh52 and Sh56 any time.
Agricultural sector that accounts for a quarter of economic output will also be affected as key inputs such as fertilisers and farm chemicals that were previously zero-rated will now attract a 16 per cent tax.
The ICT sector that has been booming over the last decade has not been spared as computer hardware and software have also been roped into the tax bracket.
There are, however, other sets of goods that escaped the tax noose after intense lobbying.
Sanitary towels, industrial plant and machinery, medicine and baby formula milk that were previously zero-rated have now been moved to exemption status.
Others are bread, wheat flour as well as supplies to oil exploration, mining and geothermal companies.
Kerosine, petroleum oils and motor spirits will also be exempted for an initial period of three years.
Tax experts at leading audit firms see the changes in VAT regime in positive light arguing it strikes some balance between government and consumer interests.
"The changes are a positive step," said Nikhil Hira, a lead tax expert at Deloitte East Africa. "The new law attempts to find a middle ground."
Treasury secretary Henry Rotich has made it clear that streamlining and managing of entire income and consumption tax exemption management was key in realising the Sh961.3 billion target in ordinary revenue stream.