Manufacturers File Lawsuit To Stop the 17.5% Export Tariff

The new 17.5 percent export and investment promotion charge on imported items including steel and clinker has been challenged in court by manufacturers who claim it will harm their industry.

They disagree with industrialist Narendra Raval, whose steel and cement enterprises stand to gain from the recent tax changes and who supports the levy.

The Kenya Association of Manufacturers (KAM) filed a lawsuit on Monday asking for the levy to be declared unlawful before Justice Mugure Thande at the High Court in Milimani, Nairobi.

The levy’s anticipated outcome of increasing regional output and exports won’t be realized, claims KAM.

Some of the reasons they were against the tax included a lack of public participation, prejudice, the National Treasury’s failure to establish the fund, and the poor quality of locally available raw materials.

“That this honorable court’s urgent intervention is therefore manifestly necessary to protect the petitioner and its members from the wanton violation of their constitutionally enshrined rights,” reads the petition.

The National Assembly, the general commissioner of the Kenya Revenue Authority, the cabinet secretary for national planning, and the attorney general are the respondents.

President William Ruto’s government believed that the introduction of the 17.5 percent export and investment promotion fee in the Finance Act 2023 would aid the nation’s goal of increasing manufacturing.

The charge, according to KAM, will be ineffective since it affects essential raw materials, some of which are not readily available locally.

The National Assembly, according to the lobby, did not conduct an analysis of the levy’s effects on the economy before it went into force on September 1.

KAM is especially concerned about the tax being imposed on steel and clinker, which is the primary raw material for cement. KAM further notes that the local raw materials were supposedly of low quality.

“This is in violation of the public’s right to protection of their health, safety, and economic interest enshrined under Article 46 (of the Constitution),” the petition goes on.

KAM objected to the Finance and National Planning Committee’s final report ignoring the majority of its members’ opposition to the new charge during the public involvement exercise.

In the course of the public involvement, Mr. Raval, who previously expressed his support for the contentious Finance Act of 2023, argued for an increase in the fee.