Starting July 1 Kenyans will have to dig deeper into their pockets to buy or refill their LPG cylinders with the introduction of Value Added Tax (VAT).
For the last five years, LPG (liquid petroleum gas) has been exclusive of VAT.
With the Finance Act 2020, a 16% VAT tax that had been introduced in 2016 but was removed will be reintroduced starting July.
KRA says told Bloomberg Tax that LPG will no longer be zero-rated as it has been since 2016.
“This means the supply of Liquified Petroleum Gas will be subjected to VAT at the standard rate of 16 per cent from July 1, 2021,” KRA told the Standard in a separate interview.
KRA noted that it is yet to give a figure on how much tax to lev on cooking gas.
“We cannot at the moment, provide a reliable estimate on the revenue expected to be raised from the imposition of VAT on LPG,” the taxman’s rep told the outlet.
Depending on the LPG company, the price will increase by Ksh168 for a 6-kg gas cylinder and about Ksh360 for a 13-kg gas cylinder. A 22-kg cylinder will have a Ksh626 increase
This will push the cost of refilling a 6-kg Kgas cylinder to between Ksh1,000 and Ksh1,050 while the brand’s 13-kg cylinder will retail at Ksh2,400 A 22-kg cylinder will retail at Ksh3,900.
A 50-kg cylinder will have a tax imposition of Ksh1,384 which will push its cost to between Ksh9,900 – Ksh10,000.
Hashi Gas brand will retail at Ksh 798 for a 6-kg cylinder and Ksh2,800 for a 13-kg cylinder. Hashi 13-kg cylinder will cost Ksh5,342.
The implementation of the tax was delayed after the Covid-19 pandemic struck in 2020. It was delayed for one year.
MPs had opposed the implementation of VAT on LPG citing constraints on Kenyans who are still reeling from the aftershocks of the Covid-19 pandemic one year later.
They argued that the imposition of the LPG VAT is likely to push thousands of households into using Kerosene and charcoal.