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08 February 2023 Kenya proposes amendments to Excise Duty Regulations
Kenya’s Cabinet Secretary for the National Treasury and Economic Planning Ministry issued the draft Excise Duty (Excisable Goods Management System) (Amendment) Regulations, 2023 (the Regulations). The Regulations propose amendments to the Excise Duty (Excisable Goods Management System) Regulations, 2017. The Regulations are principally aimed at increasing the cost of excise stamps. This action is geared towards increasing revenue collection in addition to streamlining the drafting of certain provisions of the 2017 Regulations. The increase in cost is almost double the current cost of a stamp and will thus impact the cost of excisable goods which is expected to be passed on to the consumer. Stakeholders and members of the public were invited to submit their input and concerns to the National Treasury and Economic Planning Ministry on or before 3 February 2023 to ensure there is public participation in the process of implementing the amendments. Excise stamps are paper stamps or digital stamps which the Commissioner of Domestic Taxes may approve for affixation or printing on excisable goods. Excise stamps are meant to provide visibility on the number of excisable goods produced/imported, to ensure proper accountability for excise duty and to provide authenticity by eliminating counterfeits of excisable goods. The Regulations propose an increment in excise stamp fees as outlined below. The anticipated effective date for the revised rates is 1 March 2023.
In a span of less than one year, excisable goods have thrice been the target of the Government’s revenue drive. From adjustments in the Finance Act, 2022 to inflationary adjustments and now to the proposed review of excise stamp costs. While the Government asserts that the cost of excise stamps has not been adjusted for a considerable period to cater for inflation, taxpayers contend that the beneficiary of excise stamps affixation is the Government and therefore, such cost should not be borne by the consumer. Excisable goods are listed in the First Schedule, Part I of the Excise Duty Act, 2015. However, not all excisable goods require affixation of excise stamps. The categories of excisable goods that require affixation of excise stamps have been revised to broaden the tax base. Further, exemption of certain goods from the requirement to affix excise stamps under the 2017 Regulations has been lifted in addition to the introduction of new categories of excisable goods in the Schedule to the Regulations. Other categories of excisable goods have been revised to bring more goods under the category of excisable goods. These changes are highlighted in the below table.
It is expected that there will be an increase in consumer prices of the affected goods if the Regulations are implemented. This could have a ripple effect on the economy by diminishing the consumer purchasing power and consequently lowering demand for the affected goods. The process for the purchase of excise stamps is outlined below. Local manufacturers or importers of excisable goods which are now required to be affixed with excise stamps will need to follow the procedure below to obtain excise stamps: Applicants are required to apply to the Commissioner of Domestic Taxes for excise stamps at least 60 days before the manufacture or importation of excisable goods. New users should obtain the Excise Goods Management System (EGMS) portal login credentials by filling a prescribed application form, obtainable at any Kenya Revenue Authority (KRA) office or downloaded via the EGMS link: Application For User Right Creation/Withdrawal - Excise Goods Management System. The user will be issued with their personal User Credential (Username & Password) and be trained on how to use EGMS. Once logged in to the EGMS portal, an applicant will proceed with the application for Excise Stamps. The application is made through a completed form and uploading the supporting documentation including Kenya Bureau of Standards’ certificate of compliance with standards, product sample and national identity card. After a successful application evaluation process, an applicant is notified of the approval and the EGMS will generate a payment slip to enable the applicant pay for the stamps. Once payment is confirmed the applicant will obtain the Excise Stamps, Delivery Note, and Security Pass.
Bruno Messerschmitt | bruno.messerschmitt@ey-avocats.com Kwasi Owiredu | kwasi.owiredu@uk.ey.com
Document ID: 2023-5161 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||