Kenya is in a major disagreement with her neighbour Uganda over excise duty charged on beer, pharmaceutical and spirits products exported to Uganda.
Uganda has been charging a 13 percent excise duty on the products, which Kenya finds hefty and wants the tax done away with, or the country will “retaliate”.
According to Trade Principal Secretary Chris Kiptoo, Uganda has already agreed to abolish the taxes.
“Uganda has given an undertaking that it will abolish these taxes, but if they do not we have no alternative but to reciprocate,” Kiptoo told local daily.
In a retaliatory move, Kenya is thought to be planning to tax poultry products from Uganda, which have been flooding the market at cheaper prices, killing the market for local farmers.
Kenya is now proposing a 16 percent duty on milk from Uganda after farmers raised eyebrows over competition that saw the price of the raw milk from Kenyan farmers reduce to Ksh19 from Ksh37.
Kenyan products exported to its neighbours Uganda and Tanzania have been unable to compete favourably due to heavy taxes imposed by the countries, yet Kenya have been allowing products from the countries ‘freely’.
Currently, Tanzania charges veterinary levy on Kenyan milk while Uganda charges a Value Added Tax (TAX) of 18 percent for Kenyan poultry products.
Currently, milk imported to Kenya from East African countries hit 110.7 litres in the first nine months of 2019, from three million litres in 2016.