Firms say there was no public participation on the proposed excise duty on confectionery and chocolate products
They argue that the new tax measure does not make a distinction between locally manufactured goods and imported products
They say the rules could grind manufacturing as well as distribution of their products to a halt.
Confectionery and chocolate product manufacturing companies have moved to court to challenge newly proposed financial regulations as well as the imposition of excise duty on their goods.
Five local companies have sued the National Treasury, the National Assembly and the Attorney-General.
The companies are Candy Kenya limited, Kenafric Industries Limited, Kenya Sweets Ltd, Patco Industries Ltd and Mzuri Sweets ltd.
The Kenya Revenue Authority (KRA) has been listed as an interested party in the suit.
A legal framework for imposition of excise duty on the said products is pending in Parliament under the Finance Bill 2018 but the new tax rule is set to kick off as from July 1.
The companies claim that the Finance Bill 2018 was published on June 22 and that the National Treasury Cabinet Secretary had already proposed the date when the new tax rule should take effect without any public participation carried out.
Exposed to penalties
They argue that the new tax measure does not make a distinction between locally manufactured goods and imported products yet it obliges all manufacturers to pay excise duty on confectionery and chocolate products.
They allege that they have been exposed to penalties and are bound to be prejudiced.
The firms say the new tax rule is riddled with inefficiencies that need to be sorted over time.
They say the rules could grind manufacturing and distribution of their products to a halt.
“Unless immediately stopped, it is likely to undermine the proprietary rights and interests of the said manufacturing companies,” said Mr Kelvin Mogeni for the companies.
The companies want the National Assembly and the Treasury barred from implementing the new tax law and that a section of the Finance Bill 2018 to be temporarily suspended.
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