Manufacturers might find the going tough after the Government unveiled punitive regulations aimed at catching tax cheats.
The new Excise Duty Regulations, 2019 propose harsh measures for the production of excisable goods such as beer, tobacco, and juices in what is aimed at sealing revenue leakages.
Experts have warned that while the new regulations will help the Kenya Revenue Authority (KRA) to collect more taxes, they might also result in increased cost of production.
This could, in turn, see manufacturers transfer the additional cost to consumers.
SEE ALSO :Diversify exports, Kenyans urged
The proposed regulations require manufacturers of excisable goods to meet specific requirements before they can be issued with a licence.
These include automating the production process and setting separate rooms for different manufacturing stages. Kenya Association of Manufacturers (KAM), a lobby for manufacturers, said yesterday KRA should first address all their concerns before enforcing the regulations.
“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,” said KAM Chief Executive Phylis Wakiaga.
Wakiaga added that manufacturers are already paying excise tax, which is subject to an annual inflation adjustment rate.
“Hence, the cost of stamps amounts to double taxation. Furthermore, the associated costs will negatively impact the competitiveness of industry,” she said. Philip Muema, a management partner at Andersen Tax, said the move would boost revenue collection but at the expense of increasing the cost of production for manufacturers.
SEE ALSO :Why Enterprise Road remains an eyesore
He said manufacturers will not be allowed to vary any of the production process or even their vessels without notifying the taxman.
“Manufacturers might also be required to install devices that KRA can remotely monitor,” said Muema.
This is to ensure that manufacturers cannot alter their premises without an approval licence.
In what is likely to drive some brewers out of business, will require those dealing in alcoholic drinks to produce at least 6,000 bottles per hour.
Those dealing in both imported and manufactured goods will, on the other hand, need different stores for the goods.
SEE ALSO :High taxes ‘driving illegal alcohol trade’
“A licensed premises shall provide for separate office accommodation, production area, raw materials storage and finished goods storage,” reads part of the regulations that have been published for public participation.
“Kenya Revenue Authority would like to inform members of the public, manufacturers and importers of excisable goods that Draft Excise Duty regulations, 2019 have been developed and currently hosted on the Kenya Revenue Authority website,” said the taxman on its website.
For the latest news in entertainment check out Sde.co.ke and Pulser.co.ke , for everything sports visit Gameyetu.co.ke and ladies we have you covered on Evewoman
Related Topics
Kenya Association of ManufacturersExcise Duty Regulations2019Kenya Revenue Authority
