This archive report was first published on 17 July 2019.
The Kenya Revenue Authority (KRA) has unveiled new Excise Duty Regulations, 2019, aimed at reducing revenue leakages and increasing tax collection. However, experts warn that these regulations may result in increased production costs for manufacturers.
According to the regulations, manufacturers of excisable goods such as beer, tobacco, and juices will be required to meet specific requirements before being issued with a licence. These include automating the production process and setting separate rooms for different manufacturing stages.
Kenya Association of Manufacturers (KAM) has expressed concerns over the cost of implementing the system and the cost of stamps, which they argue should not be incurred by manufacturers or consumers. KAM Chief Executive Phylis Wakiaga stated, “One of the key concerns raised include the cost of implementing the system and the cost of stamps, which should not be incurred by manufacturers, and by extension the consumers.”
Philip Muema, a management partner at Andersen Tax, also expressed concerns over the regulations, stating that they may boost revenue collection but at the expense of increasing the cost of production for manufacturers. He added that manufacturers will not be allowed to vary any of the production process or even their vessels without notifying the taxman.
Manufacturers dealing in alcoholic drinks will be required to produce at least 6,000 bottles per hour, while those dealing in both imported and manufactured goods will need different stores for the goods. The regulations also require licensed premises to provide separate office accommodation, production area, raw materials storage, and finished goods storage.
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