Kenya Association of Manufacturers Urges Favorable Tax Policies to Encourage Industrial Investments

Manufacturers are appealing to the government to ensure certainty and predictability of the tax policies to encourage industrial investments

Speaking during the launch of the Kenya Association of Manufacturers (KAM) Manufacturing Priority Agenda (MPA) 2023, KAM Chief Executive, Anthony Mwangi said that the government should finalize and implement the pro-industry National Tax Policy

"The manufacturing sector needs a predictable and reliable regulatory and tax regime. Predictability allows investors to make projections on long-term investment decisions," he said.

"Reliability gives the investment community confidence in the stability of the economic policy regime and that commitments made by the government are both binding and lasting."

Mwangi said that this can be established through the development of policies and sustainable frameworks to boost the industry's production leading to the creation of sustainable jobs and increased investments.

According to Manufacturing Priority Agenda (MPA) 2023, it was observed that Kenya has been enacting tax laws that disincentivize manufacturing despite the low capital investment in the country.

These tax laws include introduction of 16 per cent VAT on imported plant and machinery, reversal of investment deductions allowance (IDA), and limiting interest deductibility to 30% of earnings before interest, taxes, depreciation (EBITDA).

"This has major unintended consequences such as raising income tax on capital intensive businesses to 60%+ and bankrupting businesses," the agenda read.

Manufacturers therefore urged the government finalizes and implements a pro-industry National Tax Policy and reverts investment deduction allowance.

"Taxation should drive global competitiveness for locally produced goods and services, which, in turn, boost economic growth. Tax policies and laws on investments should be long-term focused and tenured to enable investors to plan with reasonable certainty," they stated the agenda.

The Association had on Tuesday, called on the government to revive and industrialize Kenya's agriculture sector.

Principal Secretary Abubakar Hassan observed that attracting investments calls for public private dialogue to improve the business environment in the country.

"We shall drive investments attraction through the National Investments Council, by attracting, facilitating and enabling investments in Kenya."

KAM Chairman Rajan Shah added that there exist endless opportunities for value addition in the agriculture sector that are untapped.

"Low-value addition in Kenya has made it impossible to realize the full potential of the manufacturing sector, hence denying citizens extra jobs, wealth retention and incentivization of the sector to increase production and economic grow," Shah said.

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