The Kenya Revenue Authority (KRA) is preparing to raid drinking
water and other beverages from
September in an effort to raise an additional Sh3.6 billion from excise tax following introduction of additional excise stamps.
September in an effort to raise an additional Sh3.6 billion from excise tax following introduction of additional excise stamps.
The roll-out of Excisable
Goods Management System (EGMS) will see manufacturers from September 1
required to affix the new generation excise stamps on bottled water,
juices, soda, energy drinks, non-alcoholic beverages, food supplements
and cosmetics.
The move comes as the taxman, who has
perennially missed tax targets, moves to seal revenue leaks against the
backdrop of ever higher collection targets set by the Treasury.
Past attempts by the KRA to roll out the system have failed after its implementation was opposed in court.
On Tuesday, KRA said it is engaging manufacturers for a smooth roll-out of the system.
“KRA
notifies the public of the go live of the excisable management system
on bottled water, juices, soda and other non-alcoholic beverages and
cosmetics effective September 1, 2019 as stipulated by Section 28 of the
Excise Act, 2015 and the Legal notice 53 of the March 2017,” said KRA
commissioner for domestic taxes Elizabeth Odundo Meyo in a notice.
“KRA will carry out sector based and general public
participation fora on EGMS. The fora will target licensed manufacturers,
importers, distributors and retailers of bottled water, juices, soda
and other non-alcoholic beverages and cosmetics,” she added.
Although
the cost of compliance is expected to be borne by the manufacturers,
they may opt to pass it to the consumer, further raising prices of these
products. However, manufacturers remained tightlipped about the
implications of the programme on prices.
“The
association will be engaging its members on the implementation of the
new generation excise stamps, as part of our public participation
process with KRA on the matter,” said Kenya Association of Manufacturers
(KAM).
The KRA under the newly appointed
Commissioner-General James Mburu is expected by the Treasury to collect
Sh1.87 trillion in taxes in the current financial year, up from the
Sh1.65 trillion it was expected to raise in the just ended financial
year.
Treasury CS Henry Rotich is seeking to raise
Sh242.2 billion in excise taxes in the 2019/2020 year compared to a
target of Sh210.1 billion previously.
KRA had said
extending use of excise stamps to the non-alcoholic sector was mainly
informed by the need to address concerns on unregulated products and
enhancing tax revenue.
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