NEW RULE

KRA starts crackdown on water, soft drinks tax cheats

The taxman has commenced its operation with major retail stores and supermarkets across the country.

In Summary

•KRA is implementing the second phase of the Excisable Goods Management System(EGMS) on bottled water, juices, energy drinks, soda and other non-alcoholic drinks.

•The authority is targeting an additional Sh4billion in the second phase of the EGMS system which commenced with alcohol and cigarettes in 2013.

KRA officials display some bottled water confiscated during a past crack down on water companies which evade tax in Mombasa on march 13,2014./FILE
KRA officials display some bottled water confiscated during a past crack down on water companies which evade tax in Mombasa on march 13,2014./FILE

Kenya Revenue Authority (KRA) is on a countrywide crackdown to enforce the Excisable Goods Management System(EGMS) on bottled water, juices, energy drinks, soda and other non-alcoholic drinks. 

This is after the lapse of a three-month window period given to manufacturers, importers, distributors, retailers and general public, on November 13 last year, to ensure the products are affixed with excise duty stamps.

The taxman commenced the exercise in major retail stores and supermarkets across the country, with the operations set to extend to small scale traders.

 

According to commissioner for domestic taxes Elizabeth Meyo, goods manufactured or imported into Kenya on or after November 13, 2019, and not bearing an excise stamp, will be seized.


“If they are not complying, definitely their products cannot be in the market,”Meyo warned, “But it is my prayer they comply so that we facilitate them.”

Water bottlers yesterday confirmed the authority had removed any non-compliant  product from major retailers. 

“All water products on the shelf that lack excise stamp are being removed,” Water Bottlers Association of Kenya (WBAK) Chairman Henry Kabogo told the Star.

The authority is targeting more than than 400 companies in the water business across the country.

 Hundreds of other companies dealing with juices, energy drinks, soda and non-alcoholic drinks are also on KRA's radar.

WBAK called for full implementation to lock out non-compliant manufacturers and dealers, some who have been accused of trying to manipulate their production lines to cheat the taxman.

 
 

“No water should be in the market without a stamp. Nobody has leeway not to pay taxes,” Kabogo said, “We are giving the implementation a week or two to see gaps that need to be addressed.”

The Consumers Federation of Kenya (Cofek) has however maintained that taxing the consumables is an unwaranted burden on consumers.

“EGMS on water, juices and non-alcoholic drinks is punitive and adds to the cost of living which is already painful for majority of Kenyan's,” secretary-general Stephen Mutoro told the Star on phone.

Manufacturers have been seeking for an extension on goods with a longer shelf-life, such as juices and energy drinks.

KRA is implementing the second phase of EGMS after a successful roll-out on alcoholic drinks and cigarettes in 2013, which helped increase excise tax from Sh700 million to the current Sh5.6 billion.

The taxman is targeting an additional Sh4billion in the current phase.

This means KRA could collect in excess of Sh9.6 billion in excise tax in the current financial year, a boots to its quest to meet its revised target of Sh 1.7 trillion.