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KRA warns water vendors over unremitted tax in race to meet targets

Times Tower
Times Tower. KRA head office in Nairobi. FILE PHOTO | NMG 

The Kenya Revenue Authority (KRA) has once again put on notice drinking water vendors who have not been collecting and remitting excise duty, as the agency races to fill its collection target in an economy negatively affected by the Covid-19 pandemic.

The KRA said in a notice dated July 17 that it has noted cases of water refillers who are not licensed and who are not charging, and remitting excise duty as required by the law.

This is the second time in just over seven months that the taxman is threatening action on those selling drinking water without charging excise.

The Excise duty on bottled water stands at Sh5.47 per litre.

“KRA wishes to remind all persons who are engaged in the business of bottling (including through refilling) or packaging water that they are required to obtain an excise licence from KRA and also charge and remit excise duty as required by the law,” said KRA in the notice.

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“Further, they are also reminded that they are required to affix excise stamps on each bottle that has been refilled or packaged.”

Water vending ATMs have become a common sight in many city estates, offering a convenient and cheaper refilling alternative to buyers.

Also targeted are the companies that supply drinking water to household dispensers, which largely use reusable bottles.

Low compliance

Last November, the taxman revealed that compliance by bottled water manufacturers has been below 30 percent hence the plan to seal the loophole, which has been exploited for several years by hundreds of bottled water firms to mint millions of shillings without paying taxes.

Speaking in November 2019, KRA Commissioner for Domestic Taxes Elizabeth Meyo said that while those vending water through water ATMs were likely to find it difficult to comply due to the nature of their operations, the taxman was willing to help them comply given that no one was going to be exempted from compliance with the law.

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