KRA denies bias on cigarette tax regime

The Kenya Revenue Authority has defended itself
against accusations by Mastermind Tobacco of unfairness in administering the proposed
tax structure for cigarettes. KRA yesterday distanced
itself from tax policy formulationsaying its role is simply to implement the policies as passed by Government.

In a press advertisement
earlier in the week, Mastermind Tobacco cited unfairness by KRA and Treasury
for allowing its competitor  to migrate
its flagship brand to lower tax band through unilateral retail price reduction,
following the amendment of Finance Bill 2010 . “The Commissioner of Domestic Taxes uses
published retail prices determined by manufacturers themselves. The
Commissioner is not empowered by law to set the retail price of cigarettes and
can therefore neither stop manufacturers from increasing or reducing prices of
their commodities,” said Kennedy
Onyonyi, Senior Deputy Commissioner in charge of Marketing and Communication at
KRA.

 The competitor in question,
British American Tobacco-Kenya, recently reduced the price of Sportsman, its flagship brand,
from Sh95 to Sh70 a packet thus moving them to a lower taxation band.

In the proposed tax structure, cigarettes
will be taxed at a fixed rate based on the retail price as a basis contrary to
the previous categorisation of cigarettes based on packaging characteristics.