Kenya to Launch New VAT on Electric Vehicle Sector

Kenya to launch new VAT on Electric Vehicle Sector. The Kenyan government plans to launch a finance bill that would apply a value-added tax (VAT) on electric vehicles, bikes, buses, and solar and lithium-ion batteries.

The aim of the Finance Bill 2024 is to widen Kenya’s tax base to encompass more economic activities while eliminating certain exemptions.

According to Nairobi-based Associated Battery Manufacturers (ABM), an eco-tax is scheduled to raise the price of a 60-kilogram solar battery in Kenya by $312 (45,000 Kenyan shillings).

There are however some concerns that the proposed taxes could impede adoption and dissuade e-mobility companies from investing in Kenya. Certain experts weighed in on the issue.

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Tom Courtright, research director at the Africa eMobility Alliance (AfEMA) criticized the taxes, stating that it might discourage investors and international donors from showing interest in the nation’s Electric Vehicles sector.

Additionally, industry stakeholders, including Guy Jack, CEO of Associated Battery Manufacturers, condemned the taxes as unsustainable and pointed out how it could negatively affect jobs.

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These concerns didn’t deter the Kenyan government though, as back in April, the government had proposed an e-mobility policy draft to motivate local manufacturing and assembly of electric vehicles while also incentivizing local battery manufacturing, recycling, and repurposing efforts.

Although the proposed taxes disconfirm his vision for a country with a successful EV sector, President William Ruto has defended the tax changes.

According to him, the changes are crucial to dealing with Kenya’s debt burden and finance development projects.


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