The Kenya Revenue Authority (KRA), in a press release dated August 24, notified all manufacturers and importers that excise duty rates were set to be adjusted to reflect prevailing inflation levels.
According to the notice seen by Kenyans.co.ke, the adjusted rates will be effective from October 1, 2020.
"KRA would therefore like to inform manufacturers and importers of excisable goods falling under the above category and members of the public that the Commissioner-General will adjust the rates of excise duty," the statement reads in part.
KRA revealed that the new rate would be dictated by the inflation rate recorded in the 2019/2020 financial year as per data from the Kenya National Bureau of Statistics (KNBS).
According to KNBS data, Kenya's inflation rate moved from an average of 4.69% in 2018 to 5.2% in 2019.
The monthly Consumer Price Indices (CPI) and rates of inflation, for the February to July 2020 period averaged at 5.55% with February recording the highest inflation rate of 7.17%.
This implies that the prices of excisable goods such as beer and alcohol are set to be adjusted upwards in line with the increased inflation rate.
Excise Duty is a system that was introduced by the taxman to safeguard excise tax revenue through the application of excise stamps which has security features. The tax is currently applicable to beer, spirits, tobacco and wine.
It is an indirect tax specifically designed to discourage the purchase of particular goods.
Despite the fact that the end consumer is not responsible for paying the tax to the government, they cover the cost of the tax by paying more for the product.
On July 8, 2019, a similar adjustment resulted in a 500ml of Tusker Lager retailing at Ksh160, Tusker Cider Ksh 170, Guinness Stout Ksh 180, White Cap Lager Ksh 170, and Balozi Lager Ksh 150.
A 330ml Smirnoff Ice Black Guarana was adjusted to Ksh 160 and a 300ml Smirnoff Ice Black at Ksh 140.
