This archive report was first published on 1 July 2021.
The National Treasury's reintroduction of a 16 percent value-added tax (VAT) on liquefied petroleum gas (LPG) has led to a significant increase in cooking gas prices in Kenya. As of July 1, 2021, the price of a 13-kilogramme cooking gas has risen to a six-year high, with the average cost now standing at Sh. 2,600.
According to the Kenya Revenue Authority, the effective date of the amendment is July 1, 2021, and the supply of LPG will be subject to VAT at the standard rate of 16 percent from this date.
Crude oil prices have hit new highs, further increasing the pressure on LPG costs. As a result, LPG sellers will immediately start passing the extra cost to consumers to comply with the new tax regulation.
"We must remit a 16 percent VAT for every cylinder sold or refilled. It is natural that we will pass the added cost to consumers," said Martin Chomba, the chair of the Petroleum Outlets Association of Kenya.
The sharp rise in cooking gas prices comes at a time when Kenyans are already reeling from the pain of high fuel prices. Petrol is currently selling at Sh. 128 per litre, while diesel is selling at Sh. 107 per litre.
