Kenya to license more industrial sugar firms
Saturday July 08 2017
The EAC Ministers for Finance, through the region’s tax remission scheme, granted Kenyan industrial sugar manufacturers duty remission on raw sugar at a duty rate of 0 per cent on condition that the finished product is not sold in the EAC Customs Territory. PHOTO | FILE
Kenya has opened its industrial sugar production to new players, offering tax incentives on imports of raw sugar — the main raw material.
This comes as Kibos Sugar, the only licensed industrial sugar manufacturer, struggles to meet the growing demand for the commodity in the region.
Kenya has received a special tax treatment from the EAC that will see its producers of industrial sugar import raw sugar duty-free for one year, effected on July 1.
The EAC Ministers for Finance, through the region’s tax remission scheme, granted Kenyan industrial sugar manufacturers duty remission on raw sugar at a duty rate of 0 per cent on condition that the finished product is not sold in the EAC Customs Territory.
READ: Kenya targets $90m in new move to mill industrial sugar
Under the region’s three band common external tariff (CET) imports of finished products from countries outside the bloc attracts a duty of 25 per cent, 10 per cent for intermediate goods and zero per cent for raw materials and capital goods, with a limited number of products on the sensitive list, which attract rates above the maximum rate of 25 per cent.
READ: EAC removes waivers on ‘sensitive goods,’ imposes common tariff
Tax experts said the new tax policy on importation of raw sugar would encourage more investors to set up plants for industrial sugar manufacturing in Kenya.
“At the moment, we do not have enough capacity to manufacture industrial sugar in Kenya. This move by the EAC Council of Ministers is meant to encourage more investors to set up plants for industrial sugar production in Kenya,” said Lillian Kubebea, a tax partner at consultancy firm Deloitte East Africa.
Kenya is seeking to be the first EAC member country to produce industrial sugar but experts say the high cost of production could render industries such as confectionery that rely on refined sugar uncompetitive across the region.
Currently, regional confectionery firms import industrial sugar duty-free under the EAC duty remission scheme.
READ: Kenya gets two more years to import duty-free sugar outside Comesa