An MP is seeking to amend the law to exempt machinery and raw materials imported for use in cottage industries from being subjected to Value Added Tax.
The Value Added Tax (Amendment) Bill, 2023, sponsored by Vihiga Women Rep Beatrice Adagala, provides for duty-free importation of machines and raw materials which are not locally available.
Adagala told the Select Committee on Budget and Appropriation enactment and enforcement that the bill will lead to creation of job opportunities.
“The resultant growth of the cottage industries shall create more job opportunities for the many unemployed citizens,” she said during consideration of bill by the committee on Thursday at a Nairobi hotel.
Machinery and equipment imported for cottage industry currently constitute five per cent of the total imports value under the category of Machinery and Equipment, government records show.
The total is estimated at Sh336 billion, according to Economic Survey 2022.
“The enactment and enforcement of the bill shall lead to an annual growth in the imports value of machinery and equipment by 10 per cent,” she said.
Adagala further said enactment of the bill will lead to development of requisite skills.
“The tax exemption shall encourage importation of machineries and equipment to be used in these cottage industries. Adoption of these advanced technologies shall require skills retooling through training in various aspects of production,” she explained.
The legislator added that due to limited finances, cottage industries struggle in adopting appropriate and new technologies to scale up their production volume and quality
She said various public policymakers are of the view that streamlining operations in the cottage industry by providing requisite policy support could help double the contribution of the sector to GDP from the current 7.6 per cent.
There exists several categories of cottage industries spread across various regions of Kenya.
Key among the categories include handicrafts, food processing, textiles, soap and candle making and carpentry.