How to net tidy cash from next budget
Traders engaged in local manufacturing of goods, construction and import of intermediate products will be the biggest money makers under the coming budget.
This even as the government prepares to milk more from Kenyans in terms of taxes.
Companies involved in textile and apparels, making of baby diapers and motorcycle assemblies, all of which are greatly driving Kenya’s economy, will also benefit from the proposals.
This is because of the tax initiatives the government has in store for the sectors in a bid to promote the capacity of local manufacturing and create jobs, as well as huge sums of monies the State has allocated to the sectors.
Government priority agenda over the 2021/22 Financial Year shows that the sectors will earn billions of shillings in Treasury’s plan to see the segments stimulate economic recovery through jobs creation, a factor that will be a big boost for investors.
National Treasury CS Ukur Yatani in the proposal said the government has set aside Sh20.5 billion to promote local industries under various ministries, departments and agencies.
These include Sh1.4 billion for the Kenya industry and entrepreneurship project, half a billion to support SMEs and Sh2 billion to add to the Credit Guarantee Scheme- a programme meant to help SMEs access financing especially after being hit by the Covid-19 scourge.
Value Added Tax
Mr Yatani said the government was exempting Value Added Tax (VAT) on health products and technologies, extending duty remission scheme to allow importers of inputs for diapers and apparels to bring them into the country duty-free, and providing rebates on excise duty for people who venture in the business of purchasing internet data in bulk for resale.
These measures will see entrepreneurs who make calculated investment choices reap huge, as the government decides to entice specific economic sectors.
For instance, a person who decides to manufacture clothes or shoes locally gains advantage over importers of the finished products, which are planned to be taxed 25 percent VAT or corresponding specific rate.
This means that local makers will have an edge over importers and have only to concentrate with producing quality products.
Mr Shadrack Njuguna, who imports shoes and clothes to sell at his shop within the Nairobi CBD says the amount of taxes he has been paying to import a pair of trousers have been high, to the point of raising prices to figures that discourage clients.
Pay heavily
“Sometimes I buy a trouser at Sh900 from the manufacturer abroad but by the time I am getting it in the shop, it has cost me at least Sh1,500. This means I have to sell it at a high price,” he says.
In the coming year, his cries can only get louder, since the government’s move will see local manufacturers left to continue operating unbothered after the government extended duty remission scheme in the sector, as importers continue to pay heavily.
Those who purchase internet data in bulk for resale are also up for booming business, following the government’s proposal to provide rebates on excise duty paid on the services they purchase for customers.
Honda Motorcycle Kenya Limited employees assemble a motorcycle in Industrial area in Nairobi on August 1, 2013.
This means thousands of Kenyans who are today engaged in the business of selling Wifi services across towns will be making good money, at a time when many youth and middle income households are adopting home internet services. And as Kenya continues with its push to minimise the plastic menace in the environment, importers of glass bottles will also gain following removal of excise duty for importation of the products between this July and June 2022.
And if you plan to purchase a motorcycle this coming year, you will be better off getting one from a local assembly plant rather than importing one that is fully assembled,
This is because the taxman will be waiting for it at the port, ready to slap it with a 15 percent excise duty, up from the Sh11,608 that is currently payable.
Unassembled motorcycles
On the other hand, importers of unassembled motorcycles will get a 10 percent duty remission, a strategic move by the government to have businesses import parts so that they can employ people to assemble them locally.
Businesses in the construction sector, which employs thousands of Kenyans, will also continue reaping following the government’s heavily budgeted projects, ranging from housing, transport infrastructure and other sectors.
The government has allocated a total of Sh310.7 billion to develop infrastructure in the coming year, Sh13.9 billion for affordable housing and Sh47.7 billion to facilitate Universal Health Coverage.
It is in these sectors that those with minds to make money should venture come next month. BY DAILY NATION
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