Starting September 1, manufacturers will be required to stick new generation excise stamps on bottled water, juices, soda, energy drinks, non-alcoholic beverages, food supplements and cosmetics, as announced by Kenya Revenue Authority (KRA) in the roll-out of Excisable Goods Management System (EGMS), an attempted effort to raise an additional Sh3.6 billion from excise tax.
“Kenya Revenue Authority(KRA) notifies the public of the Go Live of the Excisable Goods Management System on bottled water, juices, soda and other non-alcoholic beverages and cosmetics effective September 1, 2019,” read a public statement by the authority.
But manufacturers have expressed their dissatisfaction by the taxman’s move, warning of the repercussions the decision will have on the Big 4 Agenda that the government is fighting so hard to uphold. Kenya Association of Manufacturers(KAM) has pointed out that while EGMS seeks to combat illicit trade and authenticate excisable goods, the implementation of the system will have a negative impact on industries.
Struggling with high energy costs, cheap imports, unstable exchange rates and costly raw materials all which are making local manufacturers uncompetitive, the sector will be under soo much pressure if KRA implements the system.
“This will impact negatively on the competitiveness of the industry. Further, manufacturers do not have any control on possible increment on the excise stamp duty in future, as experienced by some sectors such as tobacco manufacturers, whose duty was increased from Ksh1.5 to Ksh2.8 per unit.
“As a key pillar in the Big 4 Agenda for the country, the manufacturing sector needs to be in a position to sustainably produce goods and services, whilst creating productive jobs for many in the country. We remain committed to realizing our country’s economic development,” said KAM chairman Sachen Gudka said.
Some have feared that this move will provoke unpredictable business environment that is a major disincentive for investments while others have termed it as scandalous, with bribery and tax evasions
“The more you tax people the more they tend to evade tax. People will also resort to other low-quality products and water which will expose them to diseases,” said Consumer Federation of Kenya (Cofek) Secretary-General Stephen Mutoro.