Winners and losers in Yatani’s Sh50.4bn tax measures

Budget statement 2022/2023

The government has proposed to boost spending on welfare and education as it juggled between economic revival and appeasing households increasingly restless about the runaway cost of living.

Photo credit: Benjamin Situma | Nation Media Group

President Uhuru Kenyatta's government has introduced new tax measures aimed at generating an additional Sh50.4 billion to finance the Sh3.3 trillion budget for the 2022/23 financial year.

The National Treasury expects to increase revenue collection to Sh2.1 trillion, which is Sh342 billion more than the projected Sh1.8 trillion.

To achieve this, the Finance Bill, 2022 has prioritised incentives for the health sector in a deliberate policy shift to make healthcare affordable and for local manufacturers to boost investment.


Treasury Cabinet Secretary Ukur Yatani has proposed amendments to the Value Added Tax (VAT) Act to exempt plant and machinery for use by manufacturers of pharmaceutical products.

The CS has also exempted from VAT medical oxygen supplied to registered hospital, urine bags, adult diapers, artificial breasts and colostomy bags for medical use.

He has also exempted imported inputs and raw materials used in manufacture of pharmaceuticals from paying Import Declaration Fess (IDF) and Railway Development Levy (RDL). 

“The government has been progressively addressing the cost of healthcare in the country so as to expand access to quality and affordable services,” said Mr Yatani.

He has also exempted inputs and raw materials used in in the manufacture of passenger service vehicles (PSVs) and those locally made from VAT in a move aimed at accelerating investment in the sector.

The CS has also proposed to amend the Income Tax Act to allow all entities that donate cash to charities to deduct the donation from their taxable income.

Currently, only entities that make cash donations to charities that are registered under either the Societies Act or the Non-Governmental Organisations Coordination Act are allowed to deduct the funds from their taxable income.

Mr Yatani has empowered the Kenya Revenue Authority Commissioner-General to exclude from annual inflation rate adjustment of key excisable products, such as fuel, to cushion consumers from the rising cost of living.

The CS has also removed excise duty on imported eggs for hatching after noting that its introduction last year had had an adverse effect on importers. The local production cannot meet the demand for eggs.

Farmers and pastoralists have also won big after Mr Yatani slashed the export fees on raw hides and skins, which had been imposed on the product to discourage its export and promote local value addition.

The CS has lowered the fee from 80 per cent or $0.5/kg to 50 per cent or $0.3/kg to encourage the pastoralists export more of the product.


The government is set to reap big from radio, television stations, newspapers and other advertisers of gaming, gambling and alcoholic drinks to raise new revenue.

Mr Yatani has slapped a 15 per cent excise duty on all fees charged by these advertisers, which might drive them to raise their rates and this could lead to higher cost of alcohol and gambling.

“Gambling, gaming and alcohol addiction, have become prevalent in our society. These habits are extremely addictive and can result in a variety of harmful repercussions especially to the youth. Advertisements for alcoholic beverages, betting, and gaming contribute greatly to the promotion of these habits,” he said.

The CS has also slapped a 10 per cent extra excise duty on excisable products with the exception of fuel. The Treasury expects to increase excise duty collection to Sh297 billion from Sh260 billion. 

“Given the recent global increase in oil prices, I have excluded petroleum products from this increase,” said Mr Yatani.

The CS has also slapped a Sh70 per millilitre charge on liquid nicotine, whose use has been steadily growing, arguing that the current low taxes on the products makes them easily accessible to users, including school children.