A court has cleared the first legal hurdle for the Kenya Revenue Authority (KRA) to implement higher excise stamp fees for beer, bottled water and cosmetics.
High Court judge Hedwig Ong’udi on Tuesday dismissed an application by the Law Society of Kenya (LSK) seeking to stop the KRA from implementing regulations imposing costlier security stamps.
The decision paves the way for the taxman to continue collecting views from the public on the Excise Duty (Excise Goods Management System) (Amendment) Regulations, 2023.
Enforcing the proposed regulations will raise the cost of excise stamps for the products by up to four times.
Justice Ong’undi said that the dispute was lodged prematurely because the disputed regulations had not been enacted into law. The regulations are at the public participation stage.
The proposed regulations seek to increase the fees of excise stamps for bottled water, juices and any other non-alcoholic drinks, cosmetics, alcoholic beverages, tobacco and nicotine products and export products subject to excise with effect from March 1, 2023.
The higher stamp prices will likely be passed down to the final consumer by producers and importers, similar to other excise charges.
“This court notes that the public notice dated January 17, 2023, issued by KRA on the regulations was a draft. Hence, the same is not yet finalized contrary to the petitioner’s allegations. The process is incomplete despite the contention of petitioners,” Justice Ong’udi stated.
“From a reading of the materials and pleadings, it is clear that public notice does not qualify as publication within the meaning of section 22 of the statutory instruments.”
The judge concurred with the KRA that the making of the regulations is at the consultative stage.
She, however, stated that if the KRA gave effect to the disputed regulations on March 1, 2023, or any other date before exhausting the entire legislative process, the LSK would be at liberty to move to court appropriately.
“I find the application is premature and conservatory orders cannot be granted,” said Justice Ong’udi.
The LSK is concerned that Kenyans are at risk of purchasing the products at higher prices and that illicit goods will flood the market if the KRA is allowed to implement the proposed regulations.
The proposed Excise Duty (Excisable Goods Management System) (Amendment) Regulations, 2023 proposes to raise the stamp fees for cosmetics from 60 cents per stamp to Sh2.50 — a margin of 317 percent.
The stamp fee for fruit juices and non-alcoholic beverages such as sodas will go up by 267 percent to Sh2.20 from 60 cents.
The cost of a stamp affixed on a beer bottle will double to Sh3 from Sh1.50, while those for spirits, wines and tobacco products are set for a 79 percent rise to Sh5 from the current Sh2.80 per stamp.
The fresh prices add to the recent 6.3 percent adjustment for inflation that came into effect last October and the usual rate revisions contained in the annual budget.
