The adoption of a proposal by the National treasury will see an increase in taxes on goods such as fuel and cooking gas.
This is as the treasury is seeking to set the minimum value-added tax rate at 12%.
According to the draft National Tax Policy, all goods should be taxed at 16% and the preferential rate should not be lower than 12%.
It wants tax laws reviewed once every five years to make the taxation regime predictable and make the country an attractive investment destination.
Currently, taxes are reviewed annually through the Finance Act amid protests from business people on frequent changes.
“Kenya’s tax policies are spread across various tax laws, which are amended every year during the national budget process,” says the draft policy.
“Frequent changes in tax laws cause unpredictability and inefficiency in tax administration. This creates distortions, which impose additional costs to taxpayers and the Revenue Administration.”
The Treasury says levying a lower VAT of 8 per cent on goods such as fuel creates an undue advantage over other products that are taxed at 16 percent.
The policy comes amid the push by the International Monetary fund (IMF) to double VAT on all petroleum products to cut the budget deficit and tame public borrowing.
President Uhuru Kenyatta was in 2018 forced to halve VAT on fuel to eight percent after the introduction of the full tax prompted protests from motorists and business lobbies.