Times Tower in Nairobi, the headquarters of Kenya Revenue Authority. FILE PHOTO | DENNIS ONSONGO | NMG
Consumers will pay the new excise taxes on SIM cards, beer and mobile phones after the High Court dismissed several petitions challenging the Finance Act that came into effect last July.
The Act had increased excise duty on several products including beer and other alcoholic drinks, mobile phones and SIM cards, which saw the price of new mobile phones increase by 10 percent and the cost of SIM cards by Sh50.
Duty on beer also went up by 9.97 percent to Sh134 per litre, wines by 9.99 percent to Sh229 per litre while fruit and vegetable juices will increase by 9.29 percent to Sh13.30.
The petitioners had challenged the Act, arguing that it was enacted amid a court order, that it would subject importers of taxable services to double taxation and that there was no public participation in violation of the constitution.
Digital lenders had also challenged a section of the Act, which granted Kenya Revenue Authority (KRA) powers to adjust inflation rates of excise duty and to exempt certain products from the adjustment.
Read: What you need to know about Kenya's excise duty rates, law
“Evidently, the standard of proof places the onus of proof on the petitioners. They are required to prove the elements that constitute the violation of the said rights and asserted facts which include adducing sufficient facts and evidence to justify a finding that the said rights were indeed violated and that the Finance Act, 2022 is unconstitutional,” said Justice Hedwig Ong’udi.
The judge said claims that the Act would lead to double taxation and discrimination in some cases, were speculative with no evidence.
“What’s more the petitioner has failed to show how the impugned amendments were contrary to the constitutional mandate of Parliament in the enactment of laws or that the enactment violated the laid down principles of the legislative process,” the judge said.
Justice Ong’udi said the petitioners failed to show how the increase of the taxes would inhibit access to the stated services in turn violating the alleged rights.
The case was filed by Nairobi lawyer Mwaura Kabata and was joined by the Law Society of Kenya (LSK), Viva Africa Consulting LLP, Senator Okiya Omtatah, Digital Financial Services Association of Kenya and Pubs Entertainment and Restaurants Association of Kenya (Perak).
The Digital lenders said the imposition of 16 percent VAT on the exportation of taxable services, both in and outside Kenya, amounts to double taxation by different jurisdictions.
The court further heard that the Act threatens the survival of the alcohol subsector because of the increased cost of manufacturing.
Mr Kabata said consumers and manufacturers as well as the business would suffer financially from the heightened tax pressure, which is based on increments of tax.
Read: KRA on the spot over excise taxes revision
He said the Finance Act introduced excise duty on a raft of goods and services which will automatically increase the tax burden.
The Act saw spirits like whisky, gin and rum hit with duty per litre climbing 20.31 percent to Sh335.30 after Parliament rejected a recommendation by Finance and Planning Committee to spare alcohol from higher taxes this fiscal year.
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