This archive report was first published on 18 July 2020.
Kenya's economy has received a temporary reprieve after the Kenya Revenue Authority (KRA) delayed the implementation of a new tax by six months.
The 5.5% excise duty, which was set to take effect on July 1, will now be implemented from January 2021, as per the Finance Bill of 2020.
The tax, which arises from annual inflation adjustments, will be applied to at least 31 products, including beer, fuel, water, juice, cigarettes, and motorcycles.
Manufacturers have expressed concerns that the excise duty will lead to price instability and further drive inflation, while also creating uncertainty for long-term investment decisions.
However, the KRA is optimistic that the new tax will improve revenue collection, which has been affected by the COVID-19 pandemic.
As the country continues to navigate the economic challenges posed by the pandemic, the delay in implementing the new tax is seen as a welcome relief for businesses and consumers.
