KRA eyes Sh3.6bn from excise tax on water, juice, cosmetics

The Kenya Revenue Authority (KRA) targets an additional Sh3.6 billion annually from excise tax following introduction of excise stamps on additional products from next month.

Manufacturers are from November 1 required to affix the new generation excise stamps on bottled water, juices, soda, energy drinks, other non-alcoholic beverages, food supplements and cosmetics as the taxman moves to seal revenue leaks in the backdrop of higher collection targets set by the Treasury.

“The decision to extend use of excise stamps to the non-alcoholic sector was mainly informed by the need to address concerns on the proliferation of unregulated products and enhancing tax revenue,” said KRA commissioner for domestic taxes Benson Korongo.

“Currently, revenue performance in this sector is at less than 40 per cent. The roll-out of Excisable Goods Management System (EGMS) to this sector is aimed at reversing this poor tax compliance.”

In the 2016/17 financial year KRA collected Sh165.5 billion from excise duty, which was Sh4.8 billion short of the revised target, but an 18.6 jump from the Sh139.54 billion collected in 2015/16 financial year.

The Treasury expects the taxman to collect Sh183.7 billion from excise duty in the current financial year and Sh210.3 billion in the 2018/19 period as part of revised estimates.

The KRA introduced the use of stamps under its EGMS, which kicked off three years ago, as part of a wider scheme to combat illicit trade, seal revenue leakages and boost collection.

The stamps allow consumers to verify authenticity of a product using smartphones.

Other excisable products, including beer, opaque beer, potable spirits and wines, ethyl alcohol, tobacco and tobacco products are already covered.