Kerosene users to bear brunt of new fuel taxes

By Stanley Wabomba

Kerosene users will be the hardest hit in the next Energy Regulatory Commission monthly fuel review that will see the product increase by at least 13 shillings.

This is based on the Finance Bill 2016 that imposed seven shillings and 20 cents excise duty on kerosene in addition to an increase in road maintenance levy by Ksh6.

The finance bill is usually published to clarify on some issues spelt out in the budget.

The Finance Bill 2016 spells out that a number of taxes were to be effected from Thursday last week. Among these is the import duty on kerosene at the rate of seven shillings and 20 cents as well as the road maintenance levy at the rate of 18 shillings per liter of fuel, up from 12 shillings per liter.

Even though the Energy Regulatory Commission did not include these levies in fuel tabulation this month, they are likely to reflect next month.

This means kerosene users would be the hardest hit, with the product attracting an additional 13 shillings per liter in import duty and the road maintenance levy.

The finance bill has also reinstated the appointment of withholding VAT agents after it was erroneously deleted under the Tax Procedures Act.

Even though the National Treasury has backdated its effective date to 17th January this year, tax experts feel the implementation date should have been not earlier than 9th of this month.

The finance bill also had good news for you. As a taxpayer, effective January next year, the National Treasury has revised up the annual personal relief from the current 13,944 shillings to 15,360 shillings.

In addition, under the finance bill 2016, the transition period for imposing VAT on petroleum products has been extended by a year.

Previously, petroleum products were to attract VAT effective September this year. The finance bill also had some goodies for those who own rental property.

This is after it set the minimum taxable rent income at 12,000 shillings per month effective from Thursday last week.

Previously all rental income attracted tax.

Products from export processing zones are set to reduce after the government zero rated the tariff on garments and leather footwear from EPZ, up from the previous 25 percent.

On the other hand, duty on mitumba clothes and shoes was doubled to 40 shillings per kilogram.


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