EABL to Increase Beer Prices if New Tax Proposal is Implemented

Beer-lovers in Kenya could soon be forced to dig deeper in their pockets if the new tax proposal by Treasury is implemented.

East African Breweries Limited (EABL) has warned that it could increase the prices of products by Ksh 20 in order to counter the new tax measures.

According to reports by Nation, Treasury is proposing a rise in corporate tax from 30 percent to 35 percent for firms with an annual income of more than Ksh500 million. 

Kenya Breweries Limited Managing Director Jane Karuku argues that the sector is already among the most heavily taxed in the country and that a tax increase will be a shock to the business.

“Increasing the tax base means we also have to pass some of it to the consumer. That is going to make a Tusker bottle move from the retail price of Sh160 to about 180 because the 35 percent works on the whole total drinks” she stated.

Karuku explained that of the Ksh 160 recommended retail price of a Tusker brand Ksh 87 goes to tax.

She warned that any further increment in excise and corporate tax will drive low-end customers to illicit brews. 

Furthermore, Karuku stated that with the rising inflation, a tax rise would make brands expensive, increase the cost of doing business and make Kenya lose the competitive edge. 

In 2018, Treasury introduced changes to the law where excise duty will now be reviewed annually, with the rate pegged to the average rate of inflation of the past year.