The hidden tax burdens that keep menstrual hygiene products out of the price range

When Kenya removed Value Added Tax (VAT) on sanitary towels back in 2004, the move was applauded locally and globally, as this was the first country to scrap this tax on such crucial products.

It came following intense lobbying from social entrepreneurs, rights groups and health advocates.

It was also during a season when the then administration, headed by the late President Mwai Kibaki, had introduced free primary education, and he was determined to have all the children in school.

His administration was aware of how the price point of period products was keeping the girl child from staying in school.

Then Minister for Finance David Mwiraria referenced this in his 2005 budget speech. “Our ladies have spoken loudly and clearly, in favour of cheaper sanitary towels. I have heard the message and therefore propose to amend the tariff classification, under which these items fall, to create a specific tariff number, and move them from the tariff rate of 35 to 25 per cent,” said the late minister in his speech.

But since he had no restrictions on how much VAT he could charge, the minister proposed to remove VAT on them.

“I expect the producers and the importers of these towels to lower prices and pass the benefits of these measures to consumers,” he said.

Two decades later, with more tax measures in place, sanitary towels still cost more than Sh100, depriving many from accessing these hygiene products. The reason, as noted in a new report, is the VAT-exempt regime, access to raw materials locally, and the preference for imports that do not carry the VAT burden.

It is one of the reasons why the report recommends having the products moved to VAT zero-rated, which will probably soften the prices and improve access.

The argument is that, if they are zero-rated, manufacturers will be able to claim the VAT inputs, unlike now when they have to absorb the cost by passing it to the consumer.

“Imported finished pads carry no equivalent embedded cost. Correcting this requires a Finance Bill amendment to the VAT Act, 2013,” reads the report titled “Towards Affordable Menstrual Products in Kenya: A Comprehensive Fiscal and Regulatory Reform Proposal and Advocacy Package for the Menstrual Health Market” in a research conducted by Network for Adolescent and Youth of Africa (NAYA Kenya) with support from the United Nations Population Fund (UNFPA).

While those who choose to import may not be dealing with the VAT issue, the report states the existence of the Import Duty Fee (IDF) of 2.5 per cent and the Railway Development Levy (RDL) of two per cent, which are passed to the products.

“IDF and RDL apply even to duty-remitted menstrual health inputs, adding between four and 5.5 per cent to landed cost. KRA confirmed there is no historical exemption precedent; relief requires amending the Miscellaneous Fees and Levies Act, 2016 through a Finance Bill,” the report published in July 2026 says.

These challenges are compounded by the EAC tax regime, which is so complex that it forces social enterprises to hire specialised tax experts. This comes at a cost.

“The system demands professional customs expertise that small and medium enterprises (SMEs) and social enterprises demonstrably lack. Neither producer interviewed had ever engaged with HS (Harmonised System) classification at all,” reads the report.

The report further found that when it comes to VAT exempt status, it is not a blanket one but tied to specific items and weight specifications as per the law. Hence, any material declared outside of the specified items and weight class is lawfully under the 16 per cent VAT.

The specific items and weight bands indicated include super absorbent polymer (SAP, PE film (back sheet) exempt at only 15 to 22 grams per square metre (GSM), and non-woven fabric that is also exempt at 15 – 25 GSM.

“Complexity is functioning as a regressive tax: The largest importers navigate it, the smallest actors either pay wrongly or exit importing entirely, forfeiting the very exemptions designed for them,” the report says.

The report notes that manufacturers have repeatedly reported being charged 16 per cent VAT on raw materials that the VAT Act exempts.

“KRA’s response was definitive: The customs system applies exemptions automatically where the declared tariff line is expressly exempt; charges on seemingly exempt goods almost always trace to HS code misclassification,” the report says.

The report further notes that the remedy is a consolidated KRA HS code guidance circular for all menstrual health raw materials, binding on every customs station, paired with sector-specific classification training.

When it comes to the EAC, the report notes the zero per cent duty against the 25 per cent Common External Tariff (CET), where importers can bring in specified raw materials.

The conditions are that the manufacturer, notwithstanding the size, is vetted by KRA and the National Treasury, with each shipment required to have a C60 control form (a document used to track movement of inputs) and their factory needs inspection.

The report, however, found that this provision is not familiar to the businesses interviewed.

But even for those who enrol, cost barriers persist, the report says.

“A security equal to 100 per cent of the duty otherwise payable (Section 107, EACCMA regime as applied), plus an extra one to three per cent annual insurer or facility fees,” the report says.

Responding to queries in the report, KRA clarified that the security may be a cash deposit, a bank guarantee, or an insurance bond, not cash alone.

“That flexibility softens but does not eliminate the burden: Guarantees and bonds carry real recurring fees that weigh heaviest on SMEs,” the report reads.