This archive report was first published on 22 April 2020.
Published on April 22, 2020, a power sector lobby warned that Kenyans may have to shoulder an extra burden in electricity costs if proposed tax amendments are passed.
The Tax (Amendment) Bill 2020 proposes levying a 14 per cent value added tax on power generators, a change from their previous tax-exempt status.
The Electricity Sector Association of Kenya (Esak) wants the government to reconsider the recommendations made in the Bill, saying the additional costs on electricity producers would be transferred to retailers.
“Esak notes with deep concern that the proposed Tax (Amendment) Bill, 2020 goes beyond the Covid-19 interventions announced and introduces changes to tax incentives that directly impact the electricity sector, especially upcoming renewable energy projects,” said the association in a statement.
The Bill also proposes a cut in investment deductions, a withdrawal of the exemption from compensating tax for power producers, and an increase of withholding tax on dividends to non-resident shareholders from 10 per cent to 15 per cent.
“Esak believes that the removal of exemptions that drive the growth of the electricity sector will not only affect this sector, but in turn have a ripple effect on the cost of electricity that would affect the country’s efforts to increase manufacturing capability and in the long run, the end consumer, who is the most vulnerable,” said the statement.
