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National Treasury halves stamp fees on cosmetics and non-alcoholic drinks

Treasury Cabinet Secretary Henry Rotich. [Photo: Moses Omusula, Standard]

 

The National Treasury has handed manufacturers of water, non-alcoholic drinks and cosmetic products a reprieve after it halved excise stamp fees in latest tax measures. This move could see retail prices of these products drop.

In the changes contained in the special issue of gazette notice issued by CS Henry Rotich, from a flat rate of Sh1.50 on each unit sold to consumers, the items will now attract Sh0.60.

However, mineral and aerated water will be Sh0.50 per stamp. “In exercise of the powers conferred by section 2 of the Provisional Collection of Taxes and Duties Act, the CS orders that all provisions of the Bill relating to taxes or duties shall have effect as though the Bill were passed into law,” said Rotich on laws that were effected on April 3.

Relaxation of stamp fees means that mineral water, fruit juices, cosmetic products and non-alcoholic beverages could see a drop in prices depending on the cost savings that manufacturers may derive from Rotich’s gesture.

However, beer, cider, merry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages shall still attract a fee of Sh1.50 on each stamp.

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At the same time, cigarettes containing tobacco or tobacco substitutes, wines, spirits and other alcoholic beverages obtained by fermentation of fruits have been hit. Each stamp will now attract Sh2.80 as fees, up from Sh1.50.

This may see consumers of such products incur more at retail outlets should manufacturers decide to pass this additional cost to the customers.

Africa Spirits Limited has, however, welcomed the tax proposals outlined by Rotich. The firm notes that some of the tax proposals will provide a good foundation to curb the sale of counterfeit alcoholic products. In the 2017/2018 Budget Speech, Alcoholic beverage manufacturers will now enjoy a graduated excise management goods tax rate; ranging from Sh0.50 to Sh2.5 depending on the cost of the product.

Previously, the Excisable Goods Management System (EGMS) has been applying a uniform cost of stamps irrespective of the cost of the product.

Illicit drinks

Africa Spirits Managing Director, Mr Chris Lucas said the EGMS system when properly implemented would be a big win towards the fight against counterfeits and illicit liquor. “The new security features on the new stamps that come with the EGMS system will make it easier for the Kenyan consumers to identify and choose safe alcoholic beverages. The eradication of the illicit and counterfeits drinks will also have a ripple effect on revenue generation for the government,” he said.

According to the 2017 excise duty (excisable goods management system) regulations, the excise stamp fees is paid to Kenya Revenue Authority (KRA) by the manufacturers and importers of excisable good based on quantity of stamps issued to them.

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For locally manufactured goods, the stamps are supposed to be fixed at the production facility immediately after packaging. But for those imported, they are fixed within five days of the clearance for importation.

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