Kenya to introduce new taxes for electric vehicles, solar batteries

The Kenyan government has proposed a Finance Bill 2024 that would impose a value-added tax (VAT) on electric bikes, buses, and lithium-ion batteries including solar-powered ones.

If passed, the proposed tax will go into effect on July 1, 2024.

In April 2024, Kenya introduced the draft e-mobility policy, which aimed to promote local manufacturing and assembly of EVs, offering incentives to manufacturers and assemblers while supporting local battery manufacturing, recycling, and repurposing efforts.

However, this proposed tax could potentially undermine the progress made by the e-mobility policy thus far, as the two seem to be at odds with each other. The proposed tax would affect the 3,753 registered EVs in the country as of 2023.

Bill pushback

Kenyan industry players have raised concern over the proposed tax, fearing that it could significantly increase the cost of solar batteries. Furthermore, the tax comes at a time when there is a notable surge in the adoption of electric vehicles (EVs) and motorcycles in the East African country.

The proposed tax is part of Kenya's efforts to expand the nation's tax base by encompassing a wider range of economic activities and removing certain tax exemptions.

Associated Battery Manufacturers CEO Guy Jack has reportedly voiced concerned over the new tax, saying that these measures could significantly hinder the growth of the EV market in Kenya.

Even though Kenya is set to implement a new EV tax, other African countries have encouraged the adoption of electric vehicles. (Source: Image by www.slon.pics on Freepik)

While Kenya is set to implement a new EV tax, other African countries have encouraged the adoption of electric vehicles.

In 2023, Tunisia announced that it would be offering tax breaks and purchase incentives to stimulate its own EV sector.

In South Africa, ride-hailing platform Uber South Africa in November 2023 committed to becoming a zero-emissions company by 2040 by introducing a product offering called Uber Package, which will be operated by electric scooters.

Kenya has, however, been in the forefront of setting up bills that encourage innovation.

Follow Connecting Africa on our new X account @connect__africa to get the latest telecoms and tech news across Africa.

In December 2023, President William Ruto, during the country's Innovation Week, predicted that the Startup Bill 2022 will become law this year.

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*Top image source: Freepik.

— Matshepo Sehloho, Associate Editor, Connecting Africa