EAC Gazettes Some Taxes Dropped in Finance Bill 2024

The East African Community has gazetted a number of tariffs whose effect will see the introduction of some taxes initially proposed in the now scrapped Finance Bill 2024. 

The development on Sunday, June 30, has come amidst an intense conversation surrounding the Finance Bill 2024  which has led to protests across the country and the government’s eventual withdrawal of the bill. 

The tariff guide is a product of the EAC’s Council of Ministers and is typically binding - it works to align the customs duty rates in the region. It lists approved measures in the import duty rates in line with the EAC External Tariff (EAC CET).

The 131-page document which is available on the EAC website contains a series of goods targeted for taxation according to the EAC Gazette Notice Vol. AT 1 – No.18.

Among the goods highlighted is rice, with Kenya deciding to stay the EAC rate of 75 percent and opted for the lower 35 percent rate, which offers a reprieve for rice consumers. This applies to rice in the husk, husked (brown) rice, semi-milled or wholly milled rice and broken rice.

Furthermore, the EAC granted duty remission for Kenya on inputs for the manufacture of smart telecommunication devices including laptops and tablets to apply a duty rate of zero percent for one year.

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The same remission duty was granted to Kenya regarding raw materials used in the manufacture of animal feeds, a rate of zero percent for one year.

For baby diapers, the EAC has targeted this for increased taxation, with Kenya, alongside Burundi, Uganda and Tanzania staying the EAC rate of 25 percent and opting for 35 percent, meaning prices for the diapers will increase as duty increases.

Kenyans could also pay more for cooking oil and soap after the country, alongside Uganda, applied to stay the EAC rate of zero percent and opted for 10 percent for one year, for crude palm oil, which is a crucial raw material used in the manufacture of vegetable cooking oil in the country and manufacture of bar soap.

“Kenya to stay application of the EAC CET rate of 25% and apply a duty rate of 25% or US$ 500/MT whichever is higher for one year,” the gazette notice read in part.

On Liquefied Petroleum Gas (LPG), Kenya and Uganda opted to stay the EAC rate of zero percent and opted for 35 percent for the next one year.

Regarding fully assembled mobile phones, Kenya had opted for the 25 percent duty rate against the EAC rate of zero percent, a matter which could raise the cost of mobile phones even higher.

On furniture, Kenya has stayed the EAC rate of 35 percent and instead gone for a higher rate of 45 percent for the next one year whereas for screws, nuts, rivets among others, the country has stayed the EAC rate of 10 percent and settled for 35 percent or US$350.0/MT whichever is higher.

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The new taxes come after President William Ruto announced that he declined to sign the Finance Bill 2024 and sent it back to Parliament, directing through a presidential memo that all the 69 amendments be done away with.

During a televised interview, the Head of State announced that the government would have to borrow Ksh1 trillion in the current financial year, as a result of the fall of Finance Bill 2024.

“We have dropped the Finance Bill. What does that mean? It means we have gone back almost 2 years. It means that this year we are going to borrow Ksh1 trillion to be able to run our government,” Ruto disclosed.

‍Missing Fertiliser

Meanwhile, Auditor-General Nancy Gathungu has revealed that more than 564 tonnes of fertiliser that Russia gave Kenya in 2023 disappeared while in sea transit.

Russia donated 34,400 tonnes of raw fertiliser to Kenya in a bid to get support from African countries during its ongoing war with Ukraine. However, the Auditor General found that only 33,835.9 metric tonnes were received at the port of Mombasa. 

"NCPB (National Cereals and Produce Board) received 33,835.9 metric tonnes, hence a short landing of 564.1 metric tonnes from the 34,400 metric tonnes of fertiliser raw materials donated from Russia. The cause of the short landing was not explained," Gathungu explained in her audit on NCPB.

The raw fertiliser was expected to increase the amount of ready-to-use manure produced by three times and sent to farmers countrywide.

Read Also: Kenyan Farmers Hit With New Taxes

‍NHIF ‘Typo’ Leads To Ksh368 Million In Excess Pay

The National Health Insurance Fund (NHIF) meanwhile claimed that ‘typing errors’ had led to it paying out Ksh368 million in excess claims, with no proof as to where the money went to.

According to Gathungu, in the year to June 2023, NHIF had paid Ksh814.9 million in claims yet hospitals had only been charged Ksh447.12 million through 10 schemes.

NHIF, set to be replaced by the Social Health Insurance Fund (SHIF), had attributed the excess payment to ‘typing errors’ by hospital clerks but could not provide evidence of either recovering the excess payments or asking the hospitals to reconcile the data.