Court blocks KRA excise duty roll out for cosmetics, non alcoholic drinks

Court blocks KRA excise duty roll out for cosmetics, non alcoholic drinks

The Kenya Revenue Authority (KRA) has been dealt a blow in its quest to widen the tax net after the high Court temporarily suspended plans rope in non alcoholic drinks and cosmetics manufacturers.

In the plan, KRA had moved to ensure manufacturers affix excise duty stamps on their products as way of ensuring they pay taxes while giving the taxman an indication of goods sold so as to determine the tax they required to pay.

But following a petition filed by activist Okiya Omtatah, the high court has suspended the plan until the case is heard and determined.

Through the petition, Mr Omtatah claims that the matter is extremely urgent since the new system will illegally and unconstitutionally expose manufacturers, importers and consumers to the burden of meeting extra production costs.

He claimed that he is seeking the orders to protect the public from the irregular, unlawful, oppressive and unreasonable burden of higher living costs to be brought on by the Excise Goods Management System (EGMS).

“Contrary to the requirements of the Fair Administrative Action Act 2015, the EGMS was arbitrarily imposed without public participation involving all stakeholders, including, the affected manufacturers, importers, and consumers,” Mr Omtatah said in his petition.

KRA’s directive was to come into effect from November 1.

In a notice last month KRA had indicated that all juice, bottled water, plastic bottled sodas, food supplements, energy drinks and cosmetics manufactures and importers will need to have the excise duty stickers on their products.

The move was seen as a response from the growing number of water and juice manufactures, with KRA keen to ensure they all pay requisite taxes.

Currently an estimated 186 bottled water manufacturers and 28 soft drinks and juices manufacturers licensed by the authority pay tax.

The move will also see cosmetics makers and importers subjected to the same rule with KRA keen to increase revenue collection.

The excise duty stamp is seen as a counterfeit deterrent while also facilitating the tracking of excisable goods to enable accounting for the production of excisable manufactured or imported goods.

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