By Dhahabu Writer
Women in Kenya will now have to dig deeper into their pockets if they want to maintain their topnotch cosmetic looks.
This comes barely a week after the Treasury boss, Henry Rotich announced that cosmetics and beauty products will now attract a 10 per cent excise duty. Cosmetics and beauty products are not currently subject to the excise duty in the country, while in some countries in the East African Community (EAC) subject these products to excise duty.
“In order to help to move towards the harmonization of the excise duty regime in the EAC, I propose to introduce excise duty on cosmetics and beauty products at the rate of 10 per cent,” said Mr Rotich.
“I also expect that other excise duties take effect beginning July 1, as provided for by the law.”
Excise duties, different from VAT, are usually imposed on luxury items. This move means that women who cannot forego makeup will now be forced to pay more for personal care.
The Kenyan cosmetic industry is estimated to be worth over Sh8 billion, meaning Mr. Rotich could raise up to Sh800 million with effective collection of the tax.
The Export Processing Zones (EPZ) Scheme, on the other hand, will be exempted from VAT if the budget is approved by Parliament.
This means made up garments and leather footwear procured from the EPZ will be tax free to enable Kenyans to acquire new clothes and shoes at affordable prices, shunning them away from the mitumba (Second hand wears) culture. Mitumba sellers of Gikomba, Muthurwa, will take this with a pinch of salt – for those who want to remain in business would be forced to change tact and start selling new clothes, shoes and other wears.
“EPZs continue to play a significant role in the growth of our economy. However, its role has been curtailed by trade restrictions and duty free imports from COMESA countries. In order to enhance the role of the Scheme in growing our 29 economy and creating employment, I have stayed the application of import duty on these items,” said Mr Rotich.
