@TheStar

Excise tax bad for war on fakes

2 months ago, 21 Sep 23:58

By: Elizabeth Kivuva ...

The high level of excise taxes on manufactured or imported goods into the country is likely to drive up illicit trade.

Kenya Investment Authority managing director Moses Kihara said high excise duty will force traders and consumers to switch to alternatives that have less or no excise authorisations.

“When taxes are high, people find ways to evade that by seeking alternatives goods that don’t cost them much,” Kihara said.

The excise duty changes are contained in the Finance Bill 2018, in which for instance water manufacturers will be forced to pay Sh0.2 on Excisable Goods Management System (EGMS) duty and additional Sh0.5 stamp duty.

The bill that was signed into law yesterday by President Uhuru Kenyatta is now warning for a possible increase on the trade, contradicting the ongoing efforts to fight the parallel economy.

According to Kebs, these high levels of excise taxes coupled with price difference of illicit and non-illicit goods are among the key reasons for circulation of smuggled and uncustomed goods into the country from neighbouring states with low-tax regimes.

“We have cases where traders illegally smuggle parallel goods of soda and bottled water from countries such as Tanzania to make more profits,” Kebs acting managing director Bernand Nguyo said during presentation on fight against illicit trade to the senate on September 18.

The EGMS system enables an excise stamp to be appended on product at manufacturing site are and then tracked along the supply chain.

Kenya Revenue Authority had deferred the implementation of EGMS on juices, soda and other non-alcoholic beverages and cosmetics in July that was to commence on 1st August 2018.

The excise duty is also meant to generate Sh3.6 billion additional revenue annually.

Kebs has warned that the trade will lead to loss of market share or even closure of industries producing the similar goods extending to reduction in tax revenue.

Nguyo said the existing coordinated control border patrol by multiple state agencies will ensure no goods come through the wrong points of entry.

“We are not relenting on this war against illicit trade. We are prepared to ensure uncustomed goods don’t get into the country,” Nguyo said.

According to Kebs, estimating the economic size of illicit trade is difficult, but says the trade has increased 7 times faster than legal trade since 1990s.

The IMF and World Bank estimates that illicit trade represents 15 to 20 per cent of global GDP.


Read More


Category: business news topnews

Suggested

6 hours ago, 00:06
@StandardMedia - By: Dominic Omondi
Taxpayers get short end of stick in Treasury’s borrowing binge

With most of the cash going into debt repayment and some of it lost to graft, this has cut off financing to essential areas of the economy. ...

Category: business news
11 hours ago, 19:12
@BusinessDaily - By: Brian Ngugi
Mergers to help banks weather interest rate caps

Kenyan commercial banks are coming under pressure to merge and create entities large enough to survive financial crisis in the wake of stricter regulatory and competitive landscape. ...

Category: business markets news opinion
6 hours ago, 00:06
@StandardMedia - By: Frankline Sunday
Fact Checker: Uhuru’s claim old hands are clean from graft allegations not true

Recently nominated Moody Awori was among the officials recommended for prosecution for their role in the Anglo Leasing scandal ...

Category: business news
6 hours ago, 00:06
@StandardMedia - By: Standard Reporter
Leading youth entrepreneurs of the year unveiled

The awards are designed to identify upcoming and industrious entrepreneurs aged below 35 years with great business acumen ...

Category: business news
6 hours ago, 00:06
@StandardMedia - By: Dominic Omondi
Disproportionate: Sh6b wasted on fertiliser as State plan fails to raise yields

New data shows cereals production for the nine years have not improved despite the billions poured into State’s subsidy programme. ...

Category: business news
6 hours ago, 23:29
@TheStar - By: Elizabeth Kivuva ...
Ethiopian Airlines frustrating open skies deal - Mikosz

Kenya Airways has accused Ethiopian Airlines of protectionism and government backing to become largest transfer hub for long-haul travel to Africa.KQ chief executive Sebastian Mikosz said that the str ...

Category: topnews news business

@TheStar

Excise tax bad for war on fakes

2 months ago, 21 Sep 23:58

By: Elizabeth Kivuva ...

The high level of excise taxes on manufactured or imported goods into the country is likely to drive up illicit trade.

Kenya Investment Authority managing director Moses Kihara said high excise duty will force traders and consumers to switch to alternatives that have less or no excise authorisations.

“When taxes are high, people find ways to evade that by seeking alternatives goods that don’t cost them much,” Kihara said.

The excise duty changes are contained in the Finance Bill 2018, in which for instance water manufacturers will be forced to pay Sh0.2 on Excisable Goods Management System (EGMS) duty and additional Sh0.5 stamp duty.

The bill that was signed into law yesterday by President Uhuru Kenyatta is now warning for a possible increase on the trade, contradicting the ongoing efforts to fight the parallel economy.

According to Kebs, these high levels of excise taxes coupled with price difference of illicit and non-illicit goods are among the key reasons for circulation of smuggled and uncustomed goods into the country from neighbouring states with low-tax regimes.

“We have cases where traders illegally smuggle parallel goods of soda and bottled water from countries such as Tanzania to make more profits,” Kebs acting managing director Bernand Nguyo said during presentation on fight against illicit trade to the senate on September 18.

The EGMS system enables an excise stamp to be appended on product at manufacturing site are and then tracked along the supply chain.

Kenya Revenue Authority had deferred the implementation of EGMS on juices, soda and other non-alcoholic beverages and cosmetics in July that was to commence on 1st August 2018.

The excise duty is also meant to generate Sh3.6 billion additional revenue annually.

Kebs has warned that the trade will lead to loss of market share or even closure of industries producing the similar goods extending to reduction in tax revenue.

Nguyo said the existing coordinated control border patrol by multiple state agencies will ensure no goods come through the wrong points of entry.

“We are not relenting on this war against illicit trade. We are prepared to ensure uncustomed goods don’t get into the country,” Nguyo said.

According to Kebs, estimating the economic size of illicit trade is difficult, but says the trade has increased 7 times faster than legal trade since 1990s.

The IMF and World Bank estimates that illicit trade represents 15 to 20 per cent of global GDP.


Read More

Category: business news topnews

Suggested

6 hours ago, 00:06
@StandardMedia - By: Dominic Omondi
Taxpayers get short end of stick in Treasury’s borrowing binge

With most of the cash going into debt repayment and some of it lost to graft, this has cut off financing to essential areas of the economy. ...

Category: business news
11 hours ago, 19:12
@BusinessDaily - By: Brian Ngugi
Mergers to help banks weather interest rate caps

Kenyan commercial banks are coming under pressure to merge and create entities large enough to survive financial crisis in the wake of stricter regulatory and competitive landscape. ...

Category: business markets news opinion
6 hours ago, 00:06
@StandardMedia - By: Frankline Sunday
Fact Checker: Uhuru’s claim old hands are clean from graft allegations not true

Recently nominated Moody Awori was among the officials recommended for prosecution for their role in the Anglo Leasing scandal ...

Category: business news
6 hours ago, 00:06
@StandardMedia - By: Standard Reporter
Leading youth entrepreneurs of the year unveiled

The awards are designed to identify upcoming and industrious entrepreneurs aged below 35 years with great business acumen ...

Category: business news
6 hours ago, 00:06
@StandardMedia - By: Dominic Omondi
Disproportionate: Sh6b wasted on fertiliser as State plan fails to raise yields

New data shows cereals production for the nine years have not improved despite the billions poured into State’s subsidy programme. ...

Category: business news
6 hours ago, 23:29
@TheStar - By: Elizabeth Kivuva ...
Ethiopian Airlines frustrating open skies deal - Mikosz

Kenya Airways has accused Ethiopian Airlines of protectionism and government backing to become largest transfer hub for long-haul travel to Africa.KQ chief executive Sebastian Mikosz said that the str ...

Category: topnews news business
Our App