Expect a modest rise in the price of your favorite bottled, non-alcoholic beverage, cosmetics, food supplements and much more should the Kenya Revenue Authority (KRA) get its way in its new initiative aimed at raising Ksh 3.6 billion.
This is set to be achieved through the introduction of the Excisable Goods Management System (EGMS) by the KRA, an activity that was postponed to a later date on August 31, 2019.
The system requires that manufacturers affix the new generation excise stamp on bottled water, juice, soda, energy drinks, non-alcoholic beverages, food supplements, and cosmetics, a move that has been opposed by many manufacturers.
Kenya Association of Manufacturers (KAM) released a statement on Saturday, September 31 detailing, in their view, how the new KRA measure is going to impact the bottling industry and Kenyan consumers.
'Whilst the EGMS seeks to combat illicit trade and authenticate excisable goods, the implementation of the system will hurt the industry by raising operating costs and capital expenditures thereby significantly increasing the cost of doing business, which ends up raising the cost of living for Kenyans,' the statement read.
This is set to bear hard on Kenyans, who, according to Price Waterhouse Coopers (PwC), are already one of the most taxed people in the world.
Water Bottlers Association of Kenya (WBAK) Chairperson Henry Kabogo, talking to Business Daily on Wednesday, September 4, weighed in, stating that the new excise tax will increase the price of a 20-liter water container retailing at between Ksh 250 and 350 to between Ksh450 and 550, an 80% increase in price.
Apart from the increase in price, WBAK on Wednesday estimated that there will be a significant loss of jobs in the bottling industry, which allegedly employs more than 30,000, directly and indirectly, should KRA go ahead with the move.
Excise stamp had until recently been applied only to alcoholic beverages. KRA had stated that extending the use of excise stamps to the non-alcoholic sector was mainly informed by the need to address unregulated products and enhance revenue.
KRA postponed the rollout of the Excisable Goods Management System (EGMS) which was supposed to take effect on September 1, 2019. They claimed that the reason for the postponement was to give companies more time to get on board.
The Water Bottlers Association of Kenya warmly received the move by KRA and urged the taxman to consult widely before implementing such a move.
"We welcome the postponement of the EGMS rollout to a date we do not know. We want to believe all stakeholders will be called to discuss the rollout when all of us are ready," Kabogo is quoted on the Business Daily.
KRA maintained its stance on Wednesday, September 4, that the EGMS will provide enormous benefits for the business community by enabling them to self-police the market place to detect contraband goods.
The policing of the products is done through the use of GPS-enabled infrared scanning devices that pick the codes on stamps affixed to products, transmits the codes into KRA databases for instantaneous verification of the authenticity of products.
