KRA starts roll out of bottled water excise stamps in two weeks

The taxman will after November 13 demand excise stamps be affixed on bottled water, juices, soda and other non-alcoholic beverages as well as cosmetics, failure to which goods will be seized and offenders prosecuted.

The Kenya Revenue Authority (KRA) announced Tuesday it will in two weeks enforce the stamps in an effort to raise an additional Sh3.6 billion from excise tax.

The roll-out of the Excisable Goods Management System (EGMS) was initially set for September 1, but was delayed after consultation with manufacturers. The new system will see manufacturers required to install blowers that dry bottle caps before they are coded. In addition, they will build server rooms, lay fibre optic cables and install a software that would then make them compliant.

“KRA informs all licensed manufacturers, importers, distributors, retailers and general public that further to the Public notice dated 30 August 2019 bottled water, juices, energy drinks, soda and other non-alcoholic beverages manufactured in or imported into Kenya from 13 November, 2019 must be affixed with an Excise Stamp,” said KRA Commissioner-General James Githii Mburu in a notice.

“All bottled water, juices, energy drinks, soda and other non-alcoholic beverages manufactured or imported into Kenya before the go live date will be allowed in the market without stamps until January31, 2020,” he said.

Past attempts by KRA to roll out the system failed on court orders.

Although the cost of compliance including purchase of stamps from KRA is expected to be borne by the manufacturers, they may opt to pass it to the consumer further raising prices of these products.

Manufacturers earlier said once the new system is imposed, it would raise the cost of the goods by between 50 cents and Sh2.80 per bottle.

Manufacturers had earlier welcomed the delayed roll-out of the stamps plan, saying it gave them an opportunity to iron out the issues they had raised. It was not clear by press time whether their issues had been addressed.

"We are hopeful that the postponement will provide KRA with ample time to resolve all concerns raised by manufacturers," Phyllis Wakiaga, CEO of the Kenya Association of Manufacturers, told the Business Daily earlier.

KAM had said the system would be ineffective in addressing the tax evasion practices that the taxman was seeking to remedy.

"Whilst the EGMS seeks to combat illicit trade and authenticate excisable goods, the implementation of the system will have a negative impact on industry by raising operating costs and capital expenditures," KAM chairman Sachen Gudka had said.