KRA turns spotlight on non-alcoholic drinks segment

Tuesday August 29 2017

Anti-Counterfeit officer shows contraband

Anti-Counterfeit officer shows contraband processed drinks labelled "Fantastic" at Sweet R US Limited in Mombasa, Kenya. PHOTO FILE | NATION 

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Manufacturers of non-alcoholic beverages in Kenya will be required to affix excise duty stamps on their products as the government rolls out a system to broaden tax compliance.

The Kenya Revenue Authority (KRA) expects juice and bottled water manufacturers and importers to have the excise duty stickers displayed starting October 1.

Kenya has witnessed a proliferation of bottled water and ready-to-drink juice vendors. Most of the vendors do not pay taxes.

Only 186 bottled water manufacturers and 28 carbonated soft drinks/juices manufacturers licensed by KRA pay tax.

While the taxman contends that the excise duty stickers are designed to fight trade in illicit goods, protect the public from unregulated products and boost tax revenue, there are concerns it could trigger price increases as manufacturers pass on the cost to consumers.

This is based on the fact that under the new regime, all juices, flavoured water and non-alcoholic beverages will attract $0.005 per stamp.

The excisable goods management system (EGMS) is meant to track and trace revenues from manufacturers. The system, which was introduced in 2013, was first implemented on tobacco, wines and spirits, with the taxman realising over $57 million more in annual revenue.

The KRA says that beer and tobacco have emerged as the top contributors of excise tax revenue due to enhanced compliance brought about by the EGMS, growing by an