Manufacturers Warn of Hike in Prices After Reclassification of Goods From Zero-Rated to Exempt

Kenyans have been warned to brace for a significant increase in the prices of commodities after the government reclassified goods from zero-rated to tax-exempt.

Speaking on Tuesday, May 20, during the Budget Summit 2025, the Kenya Association of Manufacturers (KAM) Chief Executive Officer, Tobias Alando, said reclassification of goods from zero-rated to exempt would inevitably lead to higher prices for consumers.

It is worth noting that for zero-rated goods, the government does not tax their sale but allows credit for Value Added Tax (VAT) paid on inputs.

However, if a product is tax-exempt, the government does not tax the commodity, but the producers cannot claim credit on VAT on inputs.