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Stakeholders
Meeting on Taxes & Tariffs on Yarn for Insecticide Treated Nets (ITNs)
February 27, 2007 Nairobi, Kenya SUMMARY REPORT Background: The meeting was called by the Ministry of Health through the division of malaria control, National Malaria Control Program. The meeting was a follow up on advocacy activities planned during the second regional consultative and training meeting held in Nairobi in August 2006. While Kenya removed taxes and tariffs (T&T) on ITNs, insecticides and related materials, in 2005; VAT and import duty on yarn and over the counter products for mosquito control (coils, clips, mats, repellents etc.) was not removed. It is a stated aim of the Government of Kenya to increase availability of ITNs by encouraging local production of the commodities. Kenya currently has a about xx small scale producers of nets and netting material. Their efforts to expand are curtailed by the high levies on raw materials required to produce nets especially yarn.This one day advocacy/consultative meeting was called to bring together the Ministries of Finance and Health; manufacturers, and interested organizations to discuss modalities of lobbying the government to either totally remove T&T on yarn or improve modalities of refunding VAT rebates to manufacturers timeously. This would allow manufacturers to produce ITNs that will then be sold at competitive prices. Stakeholders/partners
that attended the meeting include the Ministry of Health (MoH), Vestergaard
Frandsen, Mossnet, Equator Apparels and Population Services International
(PSI). The representative of the Ministry of Finance/ Kenya Revenue Authority
could not make the meeting ate the last meeting due to other pressing
engagements. • Discuss the status of taxes and tariffs for netting, yarn and other raw materials required in net manufacturing and analyze opportunities and constraints to addressing them. • Discuss alternative modalities to be proposed to government to ease the difficulties faced by manufacturers. There were no formal presentations. This was a brain storming session where manufacturers informed participants about how difficult it was to bring in yarn into the country. The current situation entails that every polyester netting fabric or yarn importer pays full import duty of 10%, 16% VAT and 2.75% of total value of product on the import declaration form (IDF). The manufacturer then submits a VAT claim to the revenue authority. The Kenya revenue authority then verifies that the netting material/yarn was used to produce nets and the VAT is refunded. The meeting was informed that the big problem is that the refunds take between 8-12 months to be processed, tying down resources that could have been ploughed back to into the manufacturing process. Since the returns are made on the 20th day of every month on average a manufacturer could have upwards of $15-20,000 held by the revenue authority. For the size of companies involved, this is indeed a huge setback. The
manufacturers further informed the meeting that due to the high manufacturing
costs, locally produced nets are expensive and cannot compete fairly with
imports from regions that have no T&T and thus low manufacturing costs.
On its part, the government explained that it has to charge T&T on
yarn because from experience the bulk of all polyester and other polyamide
yarns imported into the country are used to produce other products/textiles
with a small fraction going into net manufacturing. Further, the government
is obliged to support its policy of encouraging local production and use
of cotton. A proposal writing template prepared by NetMark has been provided to the NMCP and direct technical assistance will be provided by NetMark for the proposal writing as requested. NetMark will also provide financial assistance to have a consultant recruited to carry out the study. There being no other business the meeting was closed at 15.00 hrs. |
