The International Institute of Legislative Affairs (ILA) has warned that Kenya’s new Finance Act 2021 includes some changes in the law that will favour tobacco companies, reports The Standard.

The ILA cites section 12(d) of the Act, which introduces a new aspect of income tax through subsection 1(a). The NGO argues that this section of the law gives a minimum tax relief to individuals (businesses). It states that a person shall not pay minimum tax if that person is engaged in business whose retail price is controlled by the government, insurance business, manufacturing and that person’s cumulative investment in the preceding four years from assent is at least KES 10 billion (USD 90 million). Also excluded are persons licensed under the Special Economic Zones Act 2015 and persons engaged in the distribution business whose income is wholly based on commission. The ILA raises questions about this exemption for persons on commission. “Tobacco firms engage distributors to push their products in the market. Many are in this group,” says ILA in the analysis. “While positive for other groups, it will encourage tobacco distributors to exert more effort in flooding the market with tobacco and nicotine products thus increasing prevalence of the same products among consumers.”
The institution, however, commends some sections of the Act that it believes have addressed the problem of tobacco use, the report said. Plain polythene film and air lid papers without absorbent polymer have been added to the Value Added Tax, increasing the cost of these products. “Some of this paper is used by tobacco companies in packaging tobacco and nicotine products and this will consequently increase the production of their final product even further,” says ILA.