Cost of basic consumer goods to rise from duty adjustment

Cost of basic consumer goods to rise from duty adjustment

The cost of basic consumer goods which are the subject of excise duty is set to rise upon the adjustment of the rate of duty for inflation on October 1.

In a notice issued on Tuesday, the Kenya Revenue Authority (KRA) Commissioner General said the tax man would adjust the rate of excise duty using 4.97 per cent as the average inflation rate covering the 2020/21 financial year.

The adjustment which is in line with provisions of the 2015 Excise Duty Act has now been subjected to stakeholder input through public participation ahead of the approval of the adjustment by National Treasury Cabinet Secretary Ukur Yatani.

The inflation adjustment is expected to impact the cost of all excisable goods and services which includes fuel products, beer, wines & spirits, food supplements, fruit juices, bottled water, cigarettes and its substitutes and motor vehicle imports.

Services covered under excise duty meanwhile include telephone and mobile internet services alongside fees charged for money transfer services by cellular phone service providers, banks, money transfer agencies and other financial service providers.

The inflation adjustment to the rate of excise duty is meant to cover KRA against revenue spillages emanating from inflation.

Ironically however, the greater cost of excisable goods will push up the rate of inflation creating a cycle of higher excise duty rates each year.

Members of public and stakeholders are expected to make submissions on the inflation adjustment of specific excise duty rates by September 13.

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Kenya Revenue Authority (KRA) Inflation excise duty

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