East African Breweries Limited (EABL) #ticker:EABL says it could increase prices of products if the Treasury implements a proposal to raise corporate tax from 30 percent to 35 percent for firms with annual income of more than Sh500 million.
Kenya Breweries Limited Managing Director Jane Karuku says a tax increase will be a shock to the business, given that the sector is already among most of the heavily taxed in the country.
“Going to 35 per cent will be a shock to us and counter-productive for business. We are among the highly taxed companies in Kenya and in the region,” she said.
“Increasing the tax base means we also have to pass some of it to the consumer. That is going to make Tusker bottle move from retail price of Sh160 to about 180 because the 35 percent works on the whole total drinks.”
She spoke on Wednesday ahead of the company’s presentation on proposed tax reform to the Treasury for 2019/2020 financial year. Of the Sh160 recommended retail price of a Tusker brand Ms Kuruku said, Sh87 goes to tax and that any further increment in excise and corporate tax will drive low end customers to illicit brews.
Ms Karuku told the press that with inflation rising, a tax rise would make brands expensive, increase cost of doing business and make Kenya lose competitive edge.
The Treasury last year introduced changes to the law where excise duty will now be reviewed annually, with the rate pegged to the average rate of inflation of the past year.
Alcohol business has also had challenges between county government and national government laws, leading to disruption of businesses in counties such as Kiambu.
EABL corporate relations director Eric Kiniti said the company is concerned by the lack of a harmonised taxation system by the national and county governments.
“Each county has its own law on the regulation of alcohol. Since this falls under devolved functions, we are working with the Council of Governors to push for the implementation of a uniform law on alcohol regulation across the counties,” he said.