In a bid to counter the challenges posed by the El Niño weather pattern, the government has announced a series of new tax reforms aimed at alleviating the crisis. These measures were approved by the Cabinet during a meeting at State House on July 30, 2024.
The Cabinet’s decision, as detailed in a statement from the Ministry of Information and Media, focuses on mitigating the effects of drought and the ongoing energy crisis. To address these issues, the government has introduced tax exemptions designed to support the energy and agriculture sectors.
Key reforms include a full tax exemption on certain imported electricity and agricultural machinery for the next nine years. Specifically, from July 1, 2024, to December 31, 2033, the government will apply zero-rate VAT to equipment used in electricity generation, transmission, and distribution projects. Additionally, VAT will be waived on machinery for fertilizer manufacturing. Customs duties on mitigation equipment and accessories will also be suspended from July 1, 2024, to December 31, 2027.
These measures are intended to alleviate the economic strain caused by the drought and energy shortages. The government anticipates that the reforms will boost investment, stimulate economic activity in the energy and agriculture sectors, create jobs, and reduce poverty.
The Cabinet is optimistic that these tax reforms will play a crucial role in supporting the country’s economic development and improving the overall macroeconomic environment.
