The government increased tax on spirits by 14.3 per cent and increased duty on low-cost beers such as EABL’s Senator Keg. This will see Alcohol consumers pay more for their favorite drinks.
Henry Rotich, Treasury secretary announced yesterday that spirits, whose customer base has grown rapidly in the past five years, will be subject to an excise tax of 200 shillings per litre, an increase of 25 shillings from the current rate.
Low- cost beers manufactured using sorghum, millet or cassava will enjoy a tax remission of 80 per cent, down from 90 per cent. This means beer makers will pay a duty of 20 per cent on the expected tax from beer, up from the current 10 per cent.
He said that while the taxation of beer has not changed, the inflation adjustment will be effected from 1st, July this year increasing government revenue in line with inflation.
Manufactures of low-cost beers from sorghum, millet or cassava were in 2015 handed a reprieve after the tax remission was increased from 50 per cent to 90 per cent through the Alcoholic Drinks Control (Amendment) Act.
Last year’s Finance Act repealed this section of the law, forcing brewers to apply to the Treasury to continue enjoying the remission.
He said that new tax measures are meant to discourage the consumption of illicit drinks even as he went in for a slice of the proceeds from high value spirits whose consumption has increased tremendously.
EABL saw sales of its spirits jump 26 per cent in the six months to September as Kenyans with higher incomes embraced brands like Johnnie Walker, Smirnoff and Ciroc.
The brewer announced a 900 million shillings investment in a new spirits line to grow this segment as its mainstream beer continues to underperform due to higher taxes.
Kenya contributes to 70 percent of EABL’s profits and the prevailing tax regime in the country’s economy has significantly affected its earnings, said the CEO of EABL, Mr. Cohan in January.
Written by Amina Martha.