Pain for Kenyans, KRA Adjusts Cigarettes, Fruit Juices, Beers Price Upwards

The Kenya Revenue Authority has reviewed upwards the excise rates of several goods including beer and ciders, wines and alcohol spirits, fruit juices and cigarettes using the average inflation rate for the 2020/2021 financial year which is averaged at 4.97 per cent.

Kenyans will need to belt up as alcohol, bottled water, juices and cigarettes prices are set to go up following the adjustment of excise duty for inflation by the Kenya Revenue Authority.

The tax collector reviewed the prices upwards using the average inflation rate for the 2020/2021 financial year which is averaged at 4.97 per cent which came into effect November 2.

As a result,  manufacturers and importers of excisable goods may be forced to adjust the prices upwards to the detriment of the consumers.

This means that the rate of excise duty for fruit juices has risen to Ksh 12.17 per litre from Ksh 11.59 while duty on bottled water has been hiked to Ksh 6.03 per litre from Ksh 5.74.

Consequently, excise duty on beers whose alcohol content does not exceed 6 per cent rises to Ksh.121.85 per litre from Ksh 116.08.

The rates for spirits with alcoholic content above 6 per cent surge to Ksh 278.70 from Ksh 265.50.

Similarly, excise duty on motorcycle imports moves up to Ksh.12,185.16 per unit from Ksh.11,608.23 while duty on imported sweets settles at Ksh.36.74 per kilogram from a lower Ksh.35.

“Manufacturers & importers should note that the rates are effective from 02/11/2021, following a Gazette Notice approved on 15/10/2021. The rates do not affect petroleum products; they affect the items listed in the Gazette Notice, which is replicated in the KRA Public Notice,” KRA clarifies.

PricewaterhouseCoopers (PwC) had cautioned KRA stating that the Legal Notice No. 217 issued “…is likely to create confusion”.

“The effective date could be subject to varying interpretation, which is bound to present compliance challenges to businesses and disputes with the tax authority,” they note in their Tax Alert.