Builders, construction firms protest planned 35pc duty on tiles

Players in the building and construction industry have protested the proposal to introduce a 35 per cent excise duty on key products such as tiles, sinks and toilets.

They argue the tax could kill a section of the industry and dampen the sector that has over the years supported the economy.

Different firms have joined hands to oppose the proposals made in the Tax Laws (Amendment) Bill 2024. They note that while this is aimed at boosting the local production industry, local producers do not have adequate capacity to meet the rising demand. 

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In submission of their comments on the Bill to Parliament’s Finance Committee, the firms in the building and construction industry said the higher taxes on imported tiles and sanitary ware would drive many of them out of business.

The result, they added, could see a sharp drop in sales as many products would be out of reach for many. There is also the possibility of putting tens of thousands of Kenyans out of jobs and loss of tax revenues.

The Bill, which is undergoing public participation, has been seen as an attempt by the government to wiggle out of the situation it found itself in following the overwhelming rejection of the Finance Bill 2024 by Kenyans.

Imported sanitary

The proposed law seeks to amend the Excise Duty Act and introduce an excise duty of 35 per cent of customs value or Sh100 per kilogramme on imported sanitary ware such as ceramic sinks, washbasins, baths, water closet pans, flushing cisterns and urinals. It also proposes to introduce an excise duty of 35 per cent of customs value or Sh300 per kilogramme on imported ceramic flags and paving, hearth or wall tiles and unglazed ceramic mosaic cubes.

“These two amendments will lead to a total collapse of the building and construction industry in Kenya,” the firms said in their comments on the Bill presented to the National Assembly’s Committee on Finance and Planning.

The group said it had also written to the Treasury cabinet secretary and expressed similar concerns. They noted that a section of local manufacturers has been lobbying the government to increase taxes on imported ceramics but warn that such a move would only benefit a few players while pushing an entire segment of the industry out of business, rendering thousands jobless. While acknowledging the critical nature of local production and the need to protect it, they noted that local production is still fledgling and cannot meet the demand for tiles and sanitary ware.

“There are only a handful of tile manufacturers in Kenya… they cannot meet demand by the country building and construction industry,” said the firms, warning that many of them could go out of business if the proposals sail through.

“If this amendment goes through as it is, there will be massive layoffs. Tile sellers have made huge capital investments in retail showrooms, warehouses, logistics, and back-office teams.”