@TheStar

Excise tax bad for war on fakes

3 weeks ago, 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

11 hours ago, 15:22
@TheEastAfrican - By: Allan Olingo
Chad flies locally with Ethiopian

Tchadia Airlines made its inaugural flight on October 1. ...

Category: topnews news business
3 hours ago, 23:03
@BusinessDaily - By: Allan Odhiambo
NEWS INDEPTH: Tailors stitch a come back in Kenya

More and more people are now opting for locally made fitting garments. ...

Category: business news opinion
14 hours ago, 12:25
@DailyNation - By: Galgallo Fayo
Fate of troubled Karuturi to be known December

The Court of Appeal expected to determine if Karuturi will pay Sh1.8 billion contested debt to Stanbic Bank ...

Category: topnews news business
10 hours ago, 16:44
@BusinessDaily - By: Annie Njanja
Zuku loses fibre market share as Safaricom gains

Zuku parent firm Wananchi Group Kenya has lost its market share to rival Safaricom as the telco expands its services in across the country. ...

Category: business lifestyle news opinion
10 hours ago, 16:43
@BusinessDaily - By: Edwin Mutai
Sweets company Kenafric cleared in sugar sale row

A parliamentary team has cleared Kenafric Industries from a damning report that implicated it as one of the manufacturers that repackage imported industrial sugar for sale locally as table sugar. ...

Category: business lifestyle news opinion
12 hours ago, 14:32
@BusinessDaily -
When 'embarrassed' Uhuru declined to read his speech

President Kenyatta says he is ashamed of government's failure to deliver for SMEs ...

Category: business news lifestyle

@TheStar

Excise tax bad for war on fakes

3 weeks ago, 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

11 hours ago, 15:22
@TheEastAfrican - By: Allan Olingo
Chad flies locally with Ethiopian

Tchadia Airlines made its inaugural flight on October 1. ...

Category: topnews news business
3 hours ago, 23:03
@BusinessDaily - By: Allan Odhiambo
NEWS INDEPTH: Tailors stitch a come back in Kenya

More and more people are now opting for locally made fitting garments. ...

Category: business news opinion
14 hours ago, 12:25
@DailyNation - By: Galgallo Fayo
Fate of troubled Karuturi to be known December

The Court of Appeal expected to determine if Karuturi will pay Sh1.8 billion contested debt to Stanbic Bank ...

Category: topnews news business
10 hours ago, 16:44
@BusinessDaily - By: Annie Njanja
Zuku loses fibre market share as Safaricom gains

Zuku parent firm Wananchi Group Kenya has lost its market share to rival Safaricom as the telco expands its services in across the country. ...

Category: business lifestyle news opinion
10 hours ago, 16:43
@BusinessDaily - By: Edwin Mutai
Sweets company Kenafric cleared in sugar sale row

A parliamentary team has cleared Kenafric Industries from a damning report that implicated it as one of the manufacturers that repackage imported industrial sugar for sale locally as table sugar. ...

Category: business lifestyle news opinion
12 hours ago, 14:32
@BusinessDaily -
When 'embarrassed' Uhuru declined to read his speech

President Kenyatta says he is ashamed of government's failure to deliver for SMEs ...

Category: business news lifestyle
Our App