The Kenya Revenue Authority (KRA) has announced a revision of excise duty rates for various goods and services, which will take effect on December 27, 2024. This move comes under the provisions of the Tax Laws (Amendment) Act, 2024, which aims to increase the government’s revenue collection while addressing the rising costs of certain goods and services. The changes span several sectors, from tobacco and alcoholic beverages to imported goods and betting services.
Key Adjustments to Excise Duty Rates
Among the significant adjustments is the increase in excise duty on imported sugar. The new duty will rise from Sh5 to Sh7.50 per kilogram, with exemptions provided for sugar used in the pharmaceutical industry and by sugar refineries. This increase is expected to affect the cost of production and retail prices of sugar-related products.
Tobacco products will also see substantial changes. The excise duty on cigarettes with filters, for instance, will increase from Sh4,067 to Sh4,100 per mille, while nicotine substitutes intended for inhalation will attract a duty of Sh2,000 per kilogram, up from Sh1,594. However, medicinal tobacco products and other specific tobacco variants will remain exempt from these new rates. In addition, liquid nicotine for e-cigarettes will now be taxed at Sh100 per milliliter, a rise from the previous rate of Sh70.
The excise duty for imported sugar confectionery has also been adjusted. The duty will now stand at Sh85.82 per kilogram, up from Sh42.91, potentially leading to higher costs for candy and other sugary products.
Alcoholic Beverages and Spirits
A significant revision has been made to the excise duty on alcoholic beverages. Wines, including fortified wines, will now be taxed at Sh22.50 per centilitre of pure alcohol, a substantial increase from the previous rate of Sh243.43 per litre. Similarly, beer, cider, perry, mead, opaque beer, and mixtures of fermented beverages with non-alcoholic beverages will attract the same rate of Sh22.50 per centilitre of pure alcohol, up from Sh142.44 per litre.
Small independent brewers, however, will benefit from a preferential rate of Sh10 per centilitre of pure alcohol, a move aimed at supporting local production. For stronger alcoholic drinks such as spirits with an alcohol content exceeding 6 percent, the excise duty will be charged at Sh10 per centilitre of pure alcohol, replacing the previous rate of Sh356.42 per litre.
These changes reflect a broader effort by the government to align excise duties with the economic reality and health considerations, especially with alcohol consumption being a significant contributor to public health issues.
Changes in Plastic and Betting Duties
In an effort to generate more revenue from the importation of plastics, the KRA has imposed a 25 percent excise duty or a minimum of Sh200 per kilogram on imported self-adhesive plastic plates, sheets, film, foil, tape, strip, and other flat shapes. However, products originating from East African Community (EAC) Partner States that comply with the EAC rules of origin will be exempt from this new duty.
Furthermore, the betting sector will see an increase in excise duties. The duty on the amount wagered or staked in betting activities will rise from 12.5 percent to 15 percent. This increase will also apply to amounts paid for participating in prize competitions or purchasing lottery tickets, except in the case of charitable lotteries. The higher rates are intended to raise more funds for government projects while curbing excessive betting, which has raised concerns about its societal impact.
Compliance and Remittance Deadlines
Manufacturers and suppliers of excisable goods and services are required to charge the new excise duties from December 27, 2024, and remit the collected taxes according to specified timelines. For betting and gaming services, taxes must be remitted within 24 hours of the day’s transactions. Alcoholic beverage manufacturers must remit excise duty by the fifth day of the following month, while other licensed persons must remit by the 20th day of the month after collection.
Conclusion
The new excise duty rates introduced by the KRA reflect the government’s ongoing efforts to adjust tax policies in response to the economic environment. By imposing higher duties on goods such as tobacco, alcohol, and plastics, as well as revising tax policies on betting, the government aims to increase revenue collection while promoting public health and environmental sustainability. As businesses and consumers brace for the changes, compliance will be key to avoiding penalties and ensuring smooth operations in the coming year.
