State's sweet tooth to further bite the confectionery firms

Fruit and vegetable juices whether with sugar additives or not will increase by Sh11.04 per cent

In Summary

• Local sugar confectionery firms and traders will absorb higher taxes after inflation tax adjustment, to reflect a continued impact on declining trade of the commodity.

• In a new gazette notice by Kenya Revenue Authority, sugar confectionery including sweets, biscuits and chocolate will now cost Sh21.03 per kilogram from Sh20 with implementation of the enacted law on excise duty in the current financial year.

Sweets on a display.
Sweets on a display.

Local sugar confectionery firms and traders will absorb higher taxes after inflation tax adjustment, to reflect a continued impact on declining trade of the commodity.

In a new gazette notice by Kenya Revenue Authority, sugar confectionery including sweets, biscuits and chocolate will now cost Sh21.03 per kilogram from Sh20 with implementation of the enacted law on excise duty in the current financial year.

This is likely to make it tougher for manufacturers and exports who are currently experiencing lower output growth.

 

Balance of payments Q1 2019 by Kenya National Bureau of Statistics showed that export quantities of the product declined to 6516.4 tonnes in the first three months of the year from 7495.1 tonnes exported between October and December 2018.

This also marked lower export earnings compared to first quarters of 2017 and 2018 which recorded 8029.2 tonnes and 7468.0 tonnes respectively.

The imposing of excise duty rate and implementation of the inflation tax adjustment marks its second year consecutively being in effect after it was first implemented in the beginning of the 2018/19 financial year.

It had been held in suspension for three years before then and now will be adjusted to every start of the financial year.

“In exercise of the powers conferred by section 10 of the Excise Duty Act, 2015, the Commissioner-General adjusts for inflation the specific rates of duty set out in the Schedule hereto in accordance with the formula specified in Part 1 of the First Schedule to the Act with effect from the 1st July, 2019 and takes into account the average inflation rate for the 2018/2019 financial year of five decimal one five per centum (5.15 per cent),” KRA General Commissioner Githii Mburu said.

Its effect is also set to be hurt consumers and taxpayers with application also targeted to other goods including fruit juices, industrial oils, beer, cigarettes and motor cycles.

Tax on illuminating kerosene has rose to Sh10,835.70 from Sh10,305 per 1000 litres, while diesel oil either industrial heavy, black or for stationery engines will also increase by Sh3,890.55 from Sh3,700 per 1000 litres.

 

Fruit and vegetable juices whether with sugar additives or not will increase by Sh11.04 per cent from Sh10.50 per litre.

Similarly, bottled waters and other non-alcoholic beverages will be taxed at Sh5.47 per litre from Sh5.20.

Beer, cider and spirituous beverages of alcoholic strength not exceeding 10 per cent rose by Sh110.62 per litre from Sh105.20.

Wines including fortified wines, and other alcoholic beverages obtained by fermentation of fruits increase by Sh165.93 from Sh157.80 per litre.

This comes even with increased inflation in consistent months.

Kenya’s inflation rose slightly to 5.7 per cent in June from 5.49 per cent in May largely on increased fuel prices that stirred hike in price of basic food stuffs.

The tariff for exported motor cycles other than motor cycle ambulances and locally assembled motor cycles is Sh11,061.78 from Sh10,520 per unit.

The government targets to collect Sh37 billion from the new taxes with the total revenue collection from other pointers expected at Sh1.8 trillion in the current financial year.