Cooking gas prices hit a record high in six years on Thursday after the Treasury reintroduced a 16 percent Value Added Tax (VAT) on the commodity, adding to the pain of costly energy like fuel and electricity.
Households will pay at least Sh350 more for the 13-kilogramme cooking gas that is expected to retail at Sh2,600 on average a price level last seen in March 2015.
The 2021/2022 financial year is on, already this is the second day. And as this fiscal year starts, kenyans have no option but to tighten their belts because of the huge tax burden ahead.
The Kenya Revenue Authority (KRA) said it would impose the 16 percent tax at the start of the new financial year in what is set to push the commodity out of the reach of most households struggling with depressed incomes.
“The effective date of the amendment is 1st July 2021. This means that the supply of liquefied petroleum gas will be subject to VAT at standard rate of 16 percent from 1st July, 2021,” the KRA said in an email response to the Business Daily.
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This is in line with the Finance Act that reinstated VAT on liquefied petroleum gas (LPG), but delayed the levy for one year to July due to concerns about the cost of living.
The new tax comes at a time when crude oil prices have hit new highs, piling further pressure on LPG costs.
New prices came into force after the National Treasury Cabinet Secretary Ukur Yatani gazetted the Finance Act, 2021 days after assent by President Uhuru Kenyatta.
In the gazette notice, some sections of the new law became effective July 1 while others will begin in January 1, 2022.
“This Act may be cited as the Finance Act, 2021, and shall come into operation, or be deemed to have come into operation, as follows— (a) sections 9, 10, 13, 14, 19, 21(a), 21(b), 21(e), 40, 50, 58, 60, 73, 75, and 76, on January 1, 2022,” the notice stated.
The Financial Act of 2021 introduces amendments to various tax-related Acts of Parliament (Income tax, VAT, Exercise Duty, Tax Procedures and Miscellaneous fees and Levies) as well as other related statutes in the public finance sector including the Insurance Act, the Capital Markets Act, the Retirements Benefits Act, the Central Depositories Act, and the Stamp Duty Act.
The Bill proposed by Treasury, according CS Yatani seeks to help create a legal and policy framework to help the government achieve its medium-term budget goals.
