Kenya has lost a bid to impose a 25 per cent excise tax on imported bottles from the East African region after the court ordered that the move be frozen.
The order by the East African Court of Justice presents a major relief for local beverage manufacturers who were hit by the directive that saw them absorb extra cost as they could not pass down the costs to consumers given the low sales during a pandemic year, according to the manufacturers’ petition to Parliament in April.
Previously, the bottles had no excise duty on them but the government introduced it in April, causing Tanzanian bottle manufacturer Kioo Limited to move to court seeking to freeze the tax contained in the Business Laws (Amendment) Act.
The order served to Attorney-General Paul Kihara will be a major relief to the brewers and manufactures of other beverages using glass bottles who had decried the new tax that came at the height of a pandemic disrupted business season.
“The Court has granted Application No.9 of 2020, which sought interim orders against the respondent challenging the Business Laws (Amendment) Act, which has imposed 25 per cent excise duty on foreign goods imported into Kenya. In its ruling the court was satisfied that the reference raises a serious triable issue on the impugned law and the applicant will suffer irreparable damages. Court ordered the matter to be scheduled for hearing,” the EACJ wrote after the ruling was made.
Kioo Limited is a major supplier of glass bottles into the country and had sought the orders, arguing that the tax was discriminatory on bottles from the other EAC states in favour of those locally manufactured in Kenya, thus violating the EAC Treaty and the Customs Union and Common Market Protocols.