Alcohol brewers and distillers have criticized the Finance Bill 2024, arguing that it introduces double taxation. The Alcoholic Beverages Association of Kenya (ABAK) expressed concerns that certain provisions in the proposed law could force alcohol manufacturers to leave the country.
The Finance Bill 2024 proposes an amendment to the Excise Duty Act by deleting Section 14, which currently allows manufacturers to claim input tax. If this amendment passes, manufacturers contend they would be subject to paying more than double the current tax, severely impacting their operations.
“The net effect of this is that local manufacturers will be subjected to double taxation of the products at input stage and at the finished goods stage, whereas imported products will only be charged excise tax on the finished goods,” said ABAK chairman Eric Githua at a press conference in Nairobi.
The scrapping of the relief will push up the cost of locally produced spirits, making them less competitive and potentially stifling local manufacturing initiatives.
“It will turn Kenya into a net importer of excisable products, becoming uncompetitive within the East African Community, where significant manufacturers exist thus encouraging cross border illicit trade as products will be cheaper in the neighbouring regions,” Githua added.
Calculated based on a millilitre bottle of the most popular spirit varieties, the cost would move from Sh300 to Sh770, which also factors in the proposed increase in Excise Duty on the finished product.
“No other country is charging excise duty on raw materials. We are basically shooting ourselves in the foot because nobody will want to invest in this country and we will become net importers,” said ABAK secretary Eric Kiniti.
Overall, ABAK, said, the effect of this year’s Finance Bill combined with other actions taken by the government over the last 12 months, is the creation of an environment that would not be conducive for business.
