The Pharmaceutical Society of Kenya (PSK) has protested the move by government to move medicines from zero rated goods to being tax exempt as part of the emergency Bill announced by President Uhuru Kenyatta in response to the Covid-19 pandemic.
Pharmacists say the Tax Laws (Amendment) Bill, 2020, which is before the National Assembly Committee on Finance, will increase the cost of buying medicine for Kenyans.
PSK chief executive officer Daniella Munene says pharmaceutical sector players have always advised against making medicines tax exempt as it means manufacturers will now absorb input costs, leading to higher prices for patients.
“We have always been able to successfully appeal to Treasury to leave medicines’ VAT status as zero rated. This has essentially allowed Kenyans to pay for their medication at a lower price that does not include VAT costs,” she said.
She said value added tax (VAT) zero rating allows local drug manufacturers to claim any VAT paid for operational or manufacturing expenses instead of loading it onto the price of medication.
By contrast, VAT exemption forces manufacturers to load these costs onto the selling price.
“This added cost is multiplied through the various distribution levels leading to very high costs of medicine to the final consumer,” she said.
Dr Munene reckons that this measure proposed in the Covid-19 emergency Bill is highly insensitive to the needs of Kenyans at a time of a health crisis and particularly when many Kenyans are experiencing depressed income generation.
The PSK has further called on Mr Kenyatta not to assent to the Bill in its current state, urging the Office of the President to return it to Parliament with corrections that will cushion Kenyans.
“We call on the Senate and all Kenyans of goodwill including patient interest groups to be seized of this matter and stand with mwananchi,” she said.