AUM GANESHAY NAMAH
AUM SAI RAM
The Commissioner General (CG) of the Kenya Revenue Authority (KRA) has published Legal Notice No. 194 prescribing new specific rates of excise duty for various excisable products. The publication of the Legal Notice by the CG is in accordance with the provision of Section 10 of the Excise Duty Act, 2015 which gives the CG powers to adjust the specific rates of excise duty taking into account inflation.
The CG has adjusted upwards the excise duty rates of certain specific products to take into account the rate of inflation for the financial year 2019/2020. The ad valorem system ensures that excise duty moves in line with inflation since the duty is based on the price of excisable products, as opposed to the previous system whereby the duty was worked out as a percentage of the value of the excisable products. As per the Excise Duty Act, 2015, a specific excise duty system has been introduced for most products except cosmetics, food supplements and motor vehicles. The inflation adjustments assure that the duty is in line with price increases. T
he inflationary adjustment formula is prescribed under the First Schedule of the Excise Act. The formula prescribes an adjustment of specific excise duty rates based on the average rate of annual inflation of the preceding financial year. The CG has therefore prescribed the rates based on that basis.
Recent Developments On Excise Duty
The Finance Act, 2020 introduced the requirement for the CG to seek approval from the Cabinet Secretary, National Treasury prior to making annual inflationary adjustments to excise duty rates. Currently the CG is empowered to adjust the specific rates of excise duty due to inflation once every year by notice in the Kenya Gazette. This amendment has come into effect on 1st October 2020.
While inflationary adjustment of excise duty rates is a good Government policy aimed at ensuring excise duty revenue grows proportionally with economic growth, the Government should continuously monitor the overall impact of the excise duty increment on the purchasing power of the affected industries. However, it should be noted that increase in excise duty rates may adversely affect growth of the affected industries and may reduce demand of the excisable goods.
Thus, the decline in the industries would have a negative effect on the excise duty collected by the government due to the fall in demand of the goods. Realising the devastating effects COVID-19 has had on the economy, it would have been expected that the government would be more sympathetic and abstained from increasing the excise duty this financial year.
Table 1 - Petroleum & Petroleum Related Products
TARIFF NUMBER TARIFF DESCRIPTION PREVIOUS RATE OF EXCISE DUTY (Ksh) NEW RATE OF EXCISE DUTY (Ksh) 2709.00.10 CONDENSATES PER 1000 LITRES @ 20 DEG. C 6,545.59 6,868.94 2710.12.10 MOTOR SPIRIT (GASOLINE) REGULAR PER 1000 LITRES @ 20DEG. C 20,509.51 21,522.68 2710.12.20 MOTOR SPIRIT (GASOLINE) PREMIUM PER 1000 LITRES @ 20 DEG. C 20,919.59 21,953.02 2710.12.30 AVIATION SPIRIT PER 1000 LITRES @ 20 DEG. C 20,919.59 21,953.02 2710.12.40 SPIRIT TYPE JET FUEL PER 100 LITRES @ 20 DEG. C 20,919.59 21,953.02 2710.12.50 SPECIAL BOILING POINT SPIRIT AND WHITE SPIRIT PER 1000 LITRES @ 20 DEG. C 8,937.75 9,379.27 2710.12.90 OTHER LIGHT OILS AND PREPARATIONS PER 1000 LITRES @ 20 DEG. C 8,937.75 9,379.27 2710.19.10 PARTLY REFINED (INCLUDING TOPPED CRUDE) PER 1000 LITRES @ 20 DEG. C 1,524.68 1,600.00 2710.19.21 KEROSENE TYPE JET FUEL PER 1000 LITRES @ 20 DEG. C 6,051.38 6,350.32 2710.19.22 ILLUMINATING KEROSENE 10,835.70 11,370.98 2710.19.29 OTHER MEDIUM OILS AND PREPARATIONS PER 1000 LITRES @ 20 DEG. C 5,572.95 5,848.25 2710.19.31 GAS OIL (AUTOMOTIVE, LIGHT, AMBER FOR HIGH SPEED ENGINES) PER 1000 LITRES @ 20 DEG. C 10,835.71 11,370.99 2710.19.32 DIESEL OIL (INDUSTRIAL HEAVY, BLACK, FOR LOW SPEED MARINE AND STATIONERY ENGINES) PER 1000 @ 20 DEG. C 3,890.55 4,082.74 2710.19.39 OTHER GAS OILS PER 1000 LITRES @ 20 DEG. C 6,624.45 6,951.70 2710.19.41 RESIDUAL FUEL OILS (MARINE, FURNACE AND SIMILAR FUEL OILS) OF A KINEMATIC VISCOSITY OF 125 CENTISTOKES PER 1000 LITRES @ 20 DEG. C 315.45 331.03 2710.19.42 RESIDUAL FUEL OILS (MARINE, FURNACE AND SIMILAR FUEL OILS) OF A KINEMATIC VISCOSITY OF 180 CENTISTOKES PER 1000 LITRES @ 20 DEG. C 630.9 662.07 2710.19.43/49 RESIDUAL FUEL OILS (MARINE, FURNACE AND SIMILAR FUEL OILS) OF A KINEMATIC VISCOSITY OF 280 CENTISTOKES PER 1000 LITRES @ 20 DEG. C 630.9 662.07
Table 2 - Alcoholic/Non-Alcoholic Beverages & Other Excisable Goods
TARIFF DESCRIPTION PREVIOUS RATE OF EXCISE DUTY (Ksh) NEW RATE OF EXCISE DUTY (Ksh) FRUIT JUICES (INCLUDING GRAPE MUST), AND VEGETABLE JUICES, UNFERMENTED AND NOT CONTAINING ADDED SPIRIT, WHETHER OR NOT CONTAINING ADDED SUGAR OR OTHER SWEETENING MATTER 11.04 PER LITRE 11.59 PER LITRE BOTTLED OR SIMILARLY PACKAGED WATERS AND OTHER NON-ALCOHOLIC BEVERAGES, NOT INCLUDING FRUIT OR VEGETABLE JUICES 5.47 PER LITRE 5.74 PER LITRE BEER, CIDER, PERRY, MEAD, OPAQUE BEER AND MIXTURES OF FERMENTED BEVERAGES WITH NONALCOHOLIC BEVERAGES AND SPIRITUOUS BEVERAGES OF ALCOHOLIC STRENGTH NOT EXCEEDING 6% 110.62 PER LITRE 116.08 PER LITRE POWDERED BEER 110.62 PER LITRE 116.08 PER LITRE WINES INCLUDING FORTIFIED WINES, AND OTHER ALCOHOLIC BEVERAGES OBTAINED BY FERMENTATION OF FRUITS 189 PER LITRE 198.34 PER LITRE SPIRITS OF UNDENATURED ETHYL ALCOHOL; SPIRITS LIQUEURS AND OTHER SPIRITUOUS BEVERAGES OF ALCOHOLIC STRENGTH EXCEEDING 6% 253 PER LITRE 265.50 PER LITRE CIGARS, CHEROOTS, CIGARILLOS, CONTAINING TOBACCO OR TOBACCO SUBSTITUTES 2,624 PER KG 13,247.63 PER KG
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