This archive report was first published on 18 June 2020.
On 29 May, 2020, Treasury CS proposed an amendment to the excise duty on alcoholic products, which will see an increase in the tax on beer and spirits. The proposed amendment aims to reduce the threshold for alcohol strength from over 10% to 8% in beer and spirits.
This change will expand the tax base and raise additional revenue by bringing more products into the tax bracket. Analysts from KPMG have noted that the implication of this change is an increase in the products subject to excise duty, including those with low alcoholic content that were previously not taxed.
According to the proposed amendment, spirituous beverages of alcoholic strength exceeding 8% will be subject to excise duty of Ksh110.62, while un-denatured ethyl alcohol, spirits liqueurs, and other spirituous beverages of alcoholic strength exceeding 8% will be subject to excise duty of KSh253 per litre.
The reduced threshold will result in Kenyans paying more for alcoholic drinks. The proposed amendment also seeks to amend Regulation 2 of the Excise Duty (Remission of Excise Duty) Regulations, 2017, which introduced a 80% excise duty remission on beer manufactured using agricultural produce grown in Kenya.
Kenya Breweries Limited has submitted that the proposal to reduce excise duty remission from 80% to 60% has a net negative impact of KSh16.5 billion annually to the keg value chain and will lead to total direct job losses of over 150,000.
