This archive report was first published on 23 December 2019.
On December 23, 2019, the Kenya Revenue Authority (KRA) announced its expectations to collect between Sh1.6 billion and Sh2 billion from bottled water and soda taxes by the end of the financial year.
However, the delayed rollout of the excise tax management system for bottled water, soda, and juices has resulted in the State foregoing more than Sh1.6 billion, despite the taxman's confidence in the implementation.
The KRA had initially set an annual target of Sh3.6 billion, but the delayed rollout has affected the collection of taxes.
According to Caxton Masudi, the KRA deputy commissioner in charge of policy and domestic taxes, the system went live on November 13, despite protests from sections of manufacturers amidst a legal dispute.
"We lost half the year," Masudi said in an exclusive interview with the Business Daily.
He added, "We are expecting around Sh1.6 billion to Sh2 billion, taking note that enforcement will start at the end of January."
The system requires manufacturers to affix new generation excise stamps on bottled water, juices, soda, energy drinks, non-alcoholic beverages, food supplements, and cosmetics.
As of the interview, about 175 companies producing bottled water and juices had registered in the Excisable Goods Management System, with the KRA intending to have about 400 companies registered.
The taxman has deployed 80 personnel to help manufacturers with teething problems ahead of the January 31 deadline to effectively enforce the tax regime.
Notably, the cosmetics industry has been spared the implementation of the new tax system, pending resolution of system hitches and discussions with sector players.
