Relief for manufacturers as KRA postpones bottled drinks tax

Hawkers selling soft drinks during a past event in Kakamega High school. /FILE
Hawkers selling soft drinks during a past event in Kakamega High school. /FILE

KRA on Tuesday deferred the implementation of excise duty on bottled drinks following an outcry by stakeholders.

The Excisable Goods Management System (EGMS) on bottled water and juice was to commence on August 1.

A statement by the KRA commissioner for domestic taxes said the system launch was moved to a later date.

"The decision to postpone the go-live of EGMS on these products has been reached following extensive consultations with various stakeholders," the taxman said.

Among those involved are representatives of the Water Bottlers Association on Kenya (WBAK).

"KRA will communicate the new implementation date after concluding the activities jointly agreed with the stakeholders," the statement reads.

The move, which comes as a relief to manufacturers, followed after Parliament stopped KRA from implementing the tax system.

National Assembly Speaker Justin Muturi last Thursday ruled that rolling out the new system without the House approve regulations on the same would be illegal.

"No person, body or authority has the power to impose something that has the force of law without passing through Parliament," the speaker said.

"If something that has the force of law is being implemented without passing through this House, then it is null and void."

"If the regulations are gazetted and not tabled within seven days of gazettement in the House, it has no force of law," Muturi said.

This was after Cherang'any MP Joshua Kutuny asked for directions on the implementation of the excise duty on soft drinks.

Kutuny earlier told the Public Investment Committee that the system that was single-sourced and hence should be subjected to a forensic audit before roll-out.

He lamented that manufacturers are being forced to install the "expensive system at their own costs."

"What is needed is only a simple reconfiguration on production lines to give KRA what they want," the legislator said.

KRA was targeting to raise Sh3.6 billion in revenue upon implementation of the EGMS on bottled water, soda, juice, and other non-alcoholic beverages and cosmetics.

The tax was to affect goods that are manufactured or imported into Kenya.

This was to be done by affixing excise stamps on the mentioned products from the point of manufacture.

The taxman says the system would deter counterfeiting, facilitate tracking of the stamps and excisable goods along the supply chain.

The system was also for accounting for the production of excisable goods manufactured or imported; and to facilitate any persons in the supply chain to authenticate the stamps.

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