The cost of unga is set to remain high should new proposals carried in the Draft National Tax Policy by the National Treasury be implemented.
The draft document has proposed to limit VAT zero rating to exported goods which would see the maize flour, cassava flour, wheat and meslin flour removed from the list of zero-rated supplies.
This means that manufacturers of the product will not be able to claim reimbursement for input VAT setting off even higher prices for the already premium-priced goods.
“VAT zero rating shall be limited to exported goods except transportation of passengers and supply of taxable services by carriers on international voyage or transportation of goods by land for destination terminating outside Kenya,” reads part of the draft National Tax Policy.
Nevertheless, should the proposal take effect, unga will not attract VAT which is charged at the rate of 16 per cent as the four products are still listed under the VAT exempt supplies according to the latest updated VAT Act.
The listing of unga under exempt supplies means the supplies would still be set aside from VAT but its supplies would not be able to claim for input VAT from the Kenya Revenue Authority (KRA).
This will be a big burden to kenya taxpayers.