Economy

Court stops KRA from doubling excise stamp taxes

kra

Times Tower in Nairobi, the headquarters of Kenya Revenue Authority (KRA). FILE PHOTO | DENNIS ONSONGO | NMG

The court has handed manufacturers temporary relief after blocking the Kenya Revenue Authority (KRA) from doubling excise stamp taxes on beer, bottled water and cosmetics.

This is after Justice Hedwig Ong’udi stopped the taxman from enforcing regulation 5 of the Excise Duty (Excisable Goods Management System) amendment regulations of 2023.

The Law Society had challenged the amendment arguing that the regulations were not subjected to public participation as required by law.

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Further, lawyers said implementation of the regulations will see a sharp increase in prices of most commodities and which is a threat to the survival of manufacturers engaged in the sale and distribution of consumable products.

Justice Ong’udi said in the ruling that State organs are required to carry out their mandate in compliance with the Constitution and set statutory laws.

“In this matter, I am persuaded that the public interest outweighs the respondents’ mandate and tilts in favour of the petitioner. Therefore, putting the above in mind, I am satisfied that the principles of granting conservatory orders sought in this matter have been satisfied as will aid in meeting the ends of justice,” said the judge.

The court had in March dismissed the same case after ruling that the lawyers’ umbrella body moved to court prematurely as the regulations were still being debated and had not been enacted.

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.

LSK said when parties appeared before the court in February, KRA said the application and petition were premature as the draft regulations were undergoing the legislative process of public participation pursuant to Article 10 of the Constitution.

It was submitted that from the legal notice, it is clear that no change in the form of content has been undertaken as the regulations are a replica of the draft, which had earlier been challenged.

The LSK said the regulations, which seek to increase the price of the tax stamp are substantively improper for alienating property rights and economic interests of not only the manufacturers of consumable excisable goods but also a myriad of Kenyans who have to shoulder the exorbitant adjusted excise stamp prices.

The adjustment would have seen the increase of stamps of the products including beer, cider, mead, opaque beer, and mixtures of fermented beverages with non-alcoholic beverages from Sh1.5 to Sh3 per stamp.

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Also adjusted were prices of drinks including fortified wines, and spirits exceeding 10 percent from Sh2.8 to Sh5 per stamp and bottled water at Sh0.5 per stamp.

The LSK further pointed out that the prices of cosmetic and beauty products of tariff heading numbers 3303, 3304, 3305 and 3307 would rise from Sh0.6 to Sh2.5 per stamp.

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