Kuria proposes new tax targetting edible oil manufacturers

Trade Cabinet Secretary Moses Kuria has proposed the removal of the 35 per cent duty on edible oils amid illegal oil exportation scandal that saw private companies make duty-free imports, pocketing millions of shillings as profit.

In a letter to his National Treasury counterpart Prof Njuguna Ndung’u, the CS called for the substitution of the existing 35 per cent duty with a 10 per cent export and investment promotion levy on imported crude oil.

“In order to support local manufacturing in the edible oils value chain it is proposed that we remove the 35 per cent duty on crude oil and instead introduce a 10 per cent export levy,” Kuria said.

Forego taxes

The move comes amidst hot allegations of an oil import scam in which Kenyans lost billions of shillings on forego taxes with the oil falling to the target customers.

The programme ostensibly intended to protect consumers from exploitation by oil importers failed to lower edible oil prices even after billions of tax waivers.

Reports indicate that Kenya National Trading Company single-sourced companies contracted to import 125,000 tonnes of edible oil.

By proposing to lift import duty on crude palm oil, the government seeks to reduce the cost of cooking oil, a staple in many households. This decision is expected to have a direct positive impact on consumers, who have been burdened by exorbitant prices in recent times.

Furthermore, the introduction of a 10 per cent export levy on crude palm oil is aimed at supporting local manufacturing.

“This levy introduced on various selected goods which local manufacturers have the capacity to produce is meant to incentivise investments in local manufacturing,” Kuria said in the statement. By incentivising local production and discouraging exports, the government hopes to stimulate growth in the domestic palm oil industry.

This measure, Kuria said will create opportunities for local manufacturers to expand their operations, generate employment, and contribute to the country’s economic development.

Kuria said whereas the government has created measures to stabilize prices for essential household commodities, the importation of crude oil in the country estimated at Sh102 billion continues to draw back local manufacturing of this basic food commodity.

“The proposed substitution will be effected once the exports and investment promotion levy comes into effect and will also contribute to growth of palm, soya and sunflower farming,” he added.