KRA Issues Notice Over New Taxes Targeting Sugar, Wines, Social Media Advertisements

The Kenya Revenue Authority has notified manufacturers and importers of the listed excisable goods and suppliers of excisable goods informing them about the adjustment of the Value Added Tax (VAT).

This is in line with the Tax Laws (Amendment) Act, 2024 which adjusted the excise duty rates of the goods and services with effect from December 27, 2024. The enactment of the Act aims to expand the taxation base and ensure fair contributions from various sectors.

“The Kenya Revenue Authority (KRA) notifies all manufacturers, importers, and suppliers of excisable goods and services that the Tax Laws (Amendment) Act, 2024 has introduced Excise Duty on the following specified goods and services effective from 27th December 2024,” the statement read.

Some of the items facing increased excise duty rates include imported sugar whose new Excise Duty rate will be Ksh7.50 per kg from the previous rate of Ksh5 per kg, a matter which could be passed down to consumers who will be forced to pay more to purchase a packet of sugar.

Kenyans receiving services at KRA offices at Times Tower, Nairobi. /KENYA REVENUE AUTHORITY

Sugar is a vital commodity in Kenya, used widely in households and industries such as manufacturing and pharmaceuticals. Increasing their excise duty could reverse recent price reductions that consumers had begun to enjoy after years of record-high prices and will add to the financial strain on Kenyans, who had only just seen a significant reduction in sugar prices.

Consequently, a rise in sugar prices will have a ripple effect, increasing the cost of a range of products from food items to medicines.

Furthermore, cigarettes with filters will attract a new Excise Duty of Ksh4,100 per mille from the current Ksh4,067.03 per mille while for cigarettes without filters, the excise duty was increased from Ksh2,926.41 per mille to Ksh4,100 per mile.

Products containing nicotine or nicotine substitutes intended for inhalation without combustion or oral application will attract a new duty rate of Ksh2,000 per kg from the Ksh1,594.50 charged today. The excise duty of liquid nicotine for electronic cigarettes was increased from Ksh70 per millilitre to Ksh100 per millilitre.

However, the excise duty on nicotine products excludes those manufactured or imported for health purposes, provided they are approved by the Health Cabinet Secretary.

The new rates also target wine, beer, cider and spirits. For wines including fortified wines, and other alcoholic beverages obtained by fermentation of fruits, their excise duty will move from Ksh243.43 per litre to Ksh22.50 per centilitre of pure alcohol.

For beer, cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of an alcoholic strength not exceeding 6 per cent, their excise duty will go from Ksh142.44 per litre to Ksh22.50 per centilitre of pure alcohol. For beer, cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages manufactured by licensed small independent brewers, excise duty will move from Ksh142.44 per litre to Ksh10 per centilitre of pure alcohol.

For spirits of undenatured ethyl alcohol; spirits liqueurs and other spirituous beverages of alcoholic strength exceeding 6 per cent, excise duty will move from Ksh356.42 per litre to Ksh10 per centilitre of pure alcohol.

All of these will affect the retail price of the drinks ahead of the New Year festivities. Therefore, manufacturers, importers, and suppliers of excisable goods and services to take heed of the new rates.

"Imported self-adhesive plates, sheets, film, foil, tape, strip and other flat shapes, of plastics, whether or not in rolls of tariff number but excluding those originating from East African Community Partner States that meet the East African Community Rules of Origin will be charged at 25% to or Kshs 200 per kg, whichever is higher," read the statement in part.

Excise duty for the amount staked for gaming betting, prize competition and lottery ticket prices will increase from 12.5 per cent to 15 per cent.

Manufacturers of the excisable goods and suppliers of the excisable services are required to charge the new excise duty rates on the excisable goods and services and remit the tax collected to the Commissioner.

"In the case of betting and gaming services, within twenty-four hours from the closure of transactions of the day; in the case of licensed manufacturers of alcoholic beverages, on or before the fifth day of the month following the month in which the tax was collected; and in the case of other licensed persons, on or before the 20th day of the month following the month in which the tax was collected." read the notice in part.

Other Details of the New Excise Duties by KRA:

• Electrical Transformers: Imported fully assembled electric transformers and their parts will now be subject to a 25% excise duty. This affects several tariff headings from 8504.10.00 to 8504.34.00.
• Printing Ink: Imported printing ink, excluding those from East African Community (EAC) partner states, will be taxed at 15%. This applies to tariff headings 3215.11.00 and 3215.19.00.
• Ceramic Products: A variety of ceramic products like sinks, wash basins, and tiles, under tariff headings 6910 and 6907, will attract a duty of 5% of their custom value or a specific rate per unit, whichever is higher. For instance, ceramic sinks will be taxed at 5% or Ksh 50 per kg, while ceramic tiles will be charged at 5% or Ksh200 per square meter.
• Glass: Imported float glass, whether reflective or not, under tariff heading 7007, will be subject to a 35% duty or Ksh200 per kg, whichever is higher.
• Coal: Coal imports will now carry a 2.5% duty based on custom value.
• Plastics and Paper: Various imported polymers and printed paper products will see a 20% to 25% duty, with some specific rates like Ksh150 per kg for printed paper or paperboard.
• Online Advertising: In a fresh twist, fees charged for advertisements on the internet and social media, particularly related to alcohol, betting, gaming, lotteries, and prize competitions, will be taxed at 15%.

While making the announcement, the revenue authority revealed that the adjustments in VAT charged on the said goods were a result of the implementation of the Tax Laws (Amendment) Act, which was signed into law by President William Ruto.

According to KRA, the new charges will be effective from December 27 this year, when the Tax Laws (Amendment) Act will come into force.