KENYA – Kenya has reevaluated its requirement for alcoholic beverage manufacturers to remit taxes within 24 hours, following widespread criticism and concerns over falling profits, particularly voiced by companies like East African Breweries Plc (EABL). 

Treasury Cabinet Secretary Njuguna Ndung’u is seeking approval from lawmakers to extend the tax remittance period to five days from the time products leave stores to distributors.  

“Section 36 of the Excise Act is amended by subsection (1A) by deleting the words ‘twenty-four hours’ and replacing them with the words ‘five working days’,” Ndung’u wrote in the Bill Finance 2024, presented in the National Assembly last week. 

The amendments to the Finance Act 2023 mandated alcohol manufacturers to remit excise duty to the Kenya Revenue Authority within 24 hours of removing products from the warehouse.  

This differed from the previous policy where taxes were paid monthly on the 20th of the following month. 

If approved, the new measure, slated to come into force next financial year, will provide relief to brewers and spirits distillers, allowing them more time to remit taxes after making sales. 

EABL, the region’s largest brewer, had attributed a 22.1 percent drop in half-year profits ending December 2023 to the requirement of daily tax payments.  

EABL’s Chief Financial Officer, Risper Ohanga, highlighted the company’s need for expensive short-term borrowing to comply with the excise regime. 

Furthermore, the Finance Bill 2024 proposes a new method of calculating excise on alcoholic beverages based on alcohol by volume (ABV), replacing the current flat excise for beer, wine, and spirits.  

Spirits with ABV ranging from 37 to 45 percent will see an increase in excise duty per litre, impacting prices for consumers. 

At the lower ABV range, the excise duty per litre will jump to Kes592 per litre, while for those with an ABV of 45 percent, the excise will jump to Kes720 per litre. 

Additionally, the spirits commonly sold in 750ml bottles will now attract excise of between Kes444 and Kes540 per bottle based on the ABV. 

The proposed changes aim to address concerns raised by industry players regarding the financial burden and operational challenges posed by the previous tax remittance policy. 

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