May 19, 2020

Kenya’s treasury to rise petrol VAT, taking Sh57 per litre

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Kenya’s treasury to rise petrol VAT, taking Sh57 per litre

The Treasury in Kenya will implement a rise in value added tax (VAT) on petrol that will see it take Sh57.57 (US$0.57) for every litre.

The tax increase will be introduced to Nairobi on 1 September, and will increase the price of the fuel to Sh131.93 ($1.31) per litre.

Kenya’s Treasury has set a target of generating Sh70bn ($695.3mn) from the increase of petrol VAT.

The International Monetary Fund (IMF) proposed the rise in payment, which will increase the government’s share of the cost of a litre of petrol to 44%.

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Organisations such as the Kenya Private Sector Alliance (KEPSA), the Motorists Association of Kenya, and the Central Organisation of Trade Unions have warned of the rise in costs of the fuel following the implementation of the VAT price increase.

The institutions have expressed their concerns regarding the price rise and its effect on the nation’s economic growth, rather than generating the set Sh70bn.

Prior to the rise in VAT to be introduced at the end of this week, the country’s government already had several taxes regarding fuel, including a road maintenance levy, petroleum development levy, petroleum regulatory levy and railway development levy.

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