Govt Set to Raise Minimum Price of Alcohol

  • In a letter sent in October 2019, KRA ordered alcohol distillers to comply with an order that stated the minimum retail price of alcohol. Facebook
  • Consumers of alcoholic beverages, especially spirits may have to dig deeper into their pockets to finance their appetite for the brew if a plan by Kenya Revenue Authority is to be executed.

    This is after the tax man ordered distillers to sell alcoholic spirits in 250-milliliter containers at prices of over Ksh150.

    According to a report by Business Daily, the move by KRA could force alcohol manufacturers targetting low-end clientele to increase the cost of their products.

    Alcoholic beverages at a production line
    Alcoholic beverages at a production line

    "Based on our review, alcohol products that retail at prices below Ksh150 per bottle of 250ml of 40 per cent alcohol concentration are considered non-compliant with the minimum taxed based cost structure," KRA wrote in a letter addressed to a distiller and seen by Business Daily.

    In the letter sent in late October, the taxman ordered manufacturers to comply with the minimum price order within a seven day period that already elapsed. 

    In an interview with the newspaper, KRA Commissioner for Domestic Taxes Elizabeth Meyo stated that the new directive was put in place to nab tax cheats and boost revenue.

    However, the Competition Authority of Kenya disagreed with KRA and added that it breached a set of antitrust law regulations that bar the setting of binding prices.

    In the eventual case that distillers fail to comply with the KRA directive, they risk losing their operating licenses or have their products impounded.

    This new directive by the taxman will hit price-sensitive consumers who switched from their previous alcohol brands after affordable ones were introduced in the market. 

    On July 15, former National Authority for the Campaign Against Alcohol and Drug Abuse (NACADA) Chairman John Mututho faulted Treasury for the high cost of alcoholic beverages.

    Mututho, in a press statement at Nakuru, argued that the increased cost of genuine alcoholic beverages led to the proliferation of cheap and illicit alcohol beverages in the market.

    KRA Commissioner for Domestic Taxes Elizabeth Meyo speaking during the KRA 2019 tax payer month in October 7 at Nairobi.
    KRA Commissioner for Domestic Taxes Elizabeth Meyo speaking during the KRA 2019 taxpayer luncheon on October 7 at Nairobi.