PwC warns of confusion over KRA notice on new excise duty

Pricewaterhouse Coopers (PwC) on Tuesday warned of possible confusion over the legal notice issued on November 2 by Kenya Revenue Authority (KRA) commissioner-general Githii Mburu that seeks to adjust excise duty levied on various products.

The consulting firm warned that the notice “was published on November 2, 2021, but is dated 15, October 2021 and does not clearly define its effective date”.

“This is likely to create confusion as the effective date could be subject to varying interpretation, which is bound to present compliance challenges to businesses and disputes with the tax authority,” PwC’s tax consultants said in a statement.

In the tax alert, Mr Mburu reviewed upwards the excise duty rates for specific products, excluding petroleum products, to take into account the rate of inflation for the financial year 2020/2021 which is averaged at 4.97 percent.

The inflationary adjustment was introduced to ensure that the duty does not lag as price levels increase due to inflation.

This came after the Excise Duty Act of 2015 which introduced specific excise duty rates for most products except cosmetics, food supplements and motor vehicles.

Products affected by the notice include fruit and vegetable juices, bottled water, beer and ciders, powdered beer, wines and alcohol spirits.

Others are cigarettes, cigars and tobacco products, electronic cigarettes and cartridges used in electronic cigarettes, and other manufactured tobacco substitutes.

The new rates will also apply to imported motorcycles except for motorcycle ambulances, imported sugar confectionery, and white chocolate.