The Kenya Revenue Authority has affirmed that LPG gas will now be subjected to VAT. According to bloombergtax.com, LPG gas will have a 16% value-added tax which will start being implemented on 1st June 2021.
It is however not clear the estimated revenue that KRA will be raise from this decision.
This statement comes at a time when the government has been keen on ways to fill the budget deficits present currently.
Unfortunately, the country is not in a position to control cooking gas prices, unlike the fuel prices which are adjusted on the 15th of each month. The introduction of VAT will increase the financial dent among Kenyans.
The government had plans to introduce VAT in 2020 but prolonged the decision due to the pandemic.
This delay was made possible by the discussion held by the National Assembly and National Treasury who ruled out that it was not right to make the changes at such a time since it would increase the financial burden Kenyans were experiencing due to reduced income and job losses.
This proposal in the Finance Bill 2020 means that a 13-kilogram cooking gas could increase in price by Ksh 300. Removal of VAT on LPG gas took effect in June 2016. This was a plan introduced to adopt clean energy and decrease the use of charcoal and paraffin.
Data collected by the Energy Regulatory Authority shows that 28 percent of urban households prefer using LPG, 22 percent use charcoal and 29 percent use kerosene.