The Kenya Revenue Authority (KRA) has postponed the implementation of the Excisable Goods Management System (EGMS) through a joint statement issued by the commissioner of domestic taxes and the chairman of the Water Bottlers Association of Kenya (WBAK) on July 31.
According to Deloitte East Africa, this postponement will enable further discussions to be carried out among the relevant stakeholders so that all their objectives are addressed exhaustively.
“EGMS Regulations will be instrumental in promoting accountability for excise duty, improving revenue collections and combating illicit trade. However, the goals of the EGMS will be better achieved where the Government and relevant stakeholders are in sync in terms of how the EGMS should be implemented,” says Deloitte.
The EGMS regulations are expected to increase the capital expenditure and operating costs for the manufacturers of water and juice and this could affect them if the regulations are not properly executed.
The Background
The implementation was supposed to begin on August 1. The Authority had planned to implement EGMS in two phases where the first took effect in 2013 while the second was supposed to take effect on November 1 this year but was invalidated by the High Court over inadequate public participation on March 12, 2018.
The matter was then taken to the Court of Appeal which stayed the verdict of the High Court until the hearing and determination of the appeals before it.
The National Assembly also termed the EGMS regulations as null and void on July 26, 2018, because the house did not approve them.
The EGMS regulations were introduced through Legal Notice 53/2017effective March 30, 2017. These regulations changed the pricing “of excise stamps from a fixed price of Sh1.50 per stamp to different prices for different types of excisable goods.”
Stamps on mineral water and juices are charged Sh0.50 and Sh0.60 respectively.
Deloitte recommends: “In the absence of guidelines from KRA on the implementation of EGMS on other excisable goods such as cosmetics and food supplements, it would be useful for the manufacturers of these products to familiarise themselves with the Regulations and plan ahead accordingly.”
