Alcoholic drink brewers, already smarting from suppressed demand linked to the Covid-19 containment measures, face a fresh shock as excise duty looms on glass bottles.
Brewers have joined hands with other glass bottle users to protest the 25 percent excise tax introduced through the Business Laws (Amendment) Act, 2020, saying it will be punitive since the industry relies heavily on imports.
In a memorandum presented to the Departmental Committee on Finance and National Planning chaired by Kipkelion East MP Joseph Limo, the glass users comprising the Kenya Breweries Limited (KBL), Coca-Cola beverages Africa, UDV Kenya Limited, Kenya Wines Agency Limited (KWAL) and Trufoods Limited have asked that the excise duty be removed for being counterproductive.
The manufacturers want the First Schedule to the Excise Duty Act amended by deleting the proposed 25 percent excise duty on imported glass “because local glass making companies do not have the capacity to serve increased orders”.
“They lack modern glass technology, which prevents them from switching from one type of glass to the next efficiently and the protection of glass manufacturing companies in Kenya violates the principle of equity and fairness in the taxation of excisable goods.
“It will increase the cost of alcoholic products and soft drinks beverages in a season when household disposable income is facing the greatest negative impact due to the Covid-19 pandemic,” the manufacturers wrote.
The Kenya Revenue Authority (KRA) is said to have pushed for the amendments to boost its war on an alcohol cartel evading tax through uncustomed liquor apart from boosting the sourcing of the bottles from within the country.
Insiders at Times Tower (the KRA headquarters in Nairobi), who did not want to be named, however, said bottle trade has been a key link in the multibillion tax evasion in the alcohol sector. The cartel comprises suppliers of fake excise stamps and smugglers of ethanol who enlarge the tax evasion loophole and reverse KRA’s gains in collecting tax.