Device Assemblers Advocate for VAT Exemption on Imported Inputs to Lower Smartphone Costs

• EADAK, a smartphone manufacturer in Kenya, seeks VAT exemption on imported inputs for locally assembled phones.
• The Finance Bill 2025/26 proposes VAT exemption for locally assembled phones but not for imported inputs.
• EADAK’s CFO warns that not exempting inputs will raise assembly costs and phone prices.
• VAT exemption means no VAT on sales, but manufacturers still pay VAT on production inputs.
• Zero rating allows claiming input VAT, preventing VAT from becoming a production cost.
• EADAK faces cash flow issues due to delayed VAT refunds, affecting credit costs and reinvestment.
• The company requests VAT exemption for imported inputs to reduce costs and consumer prices.

Source: peopledaily.digital

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

---

---