Petroleum business is a high turnover and low margin business. The margins are highly controlled through the pricing formula established by the Petroleum Act 2019. This means the retail & wholesale prices are capped by the Energy and Petroleum Regulatory Authority (EPRA) every 14th of each month. The Wholesale prices for petroleum products have a maximum margin of 1% and a minimum of 0.1%. With the increase in the landing cost of petroleum, operational costs and government interventions e.g. subsidy programs, the Withholding VAT charged at 2% of taxable value of purchase is untenable to comply with.

The Commissioner General of Kenya Revenue Authority (KRA) had powers through the Tax Procedures Act 2015 to exempt deserving cases from this obligation. These powers were revoked through the Finance Act 2021, leaving the petroleum industry with no legal reprieve to get an exemption. Consequently, cashflows needed by industry players to sustain daily supply end up with KRA as WTH VAT Credits. This has had adverse impact on businesses, leading to utter collapse of enterprises.

Without the removal of the Withholding VAT the government will lose the much needed revenue on PAYE, corporation tax and other revenues generated for County Governments by the said enterprises, job losses, significant reduction of the petroleum sector capacity all leading to a negative impact on the economy.

This petition therefore demands: 

1. That the National Assembly through the Departmental committee on Finance and National Planning ensure that the Finance Bill 2023 has an amendment to the Tax Procedures Act, exempting Petroleum Products from the Withholding VAT obligation.
2. That the National Assembly through the Departmental committee on Finance and National Planning ensure that the Withholding VAT Credits be used by industry players to offset other tax heads thereby preserving operating cash in the businesses.

We are calling all industry players and members of the public to join in and sign this Petition. We also request all industry players to be prepared to appear in person when called upon to present this petition to the relevant offices.

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