KRA effects higher excise rates, signals greater fuel, alcohol prices

The Kenya Revenue Authority (KRA) adjusted its effective excise duty rate by five percent, signalling higher costs for excisable goods which largely feature fuel and alcohol.

The expected annual adjustment of the rate for inflation took effect on October 1 despite opposition from a number of players who had sought a hold of previous rate as cushioning from effects of the pandemic.

For instance, beer distributors had asked the tax man along with the National Treasury to reconsider mooting the adjustment as the sector seeks to recover from restrictions which saw bars and entertainment joints close their doors for the better part of six months.

The excise duty adjustment is inline with the annual inflation rate across the 2019/20 financial year to June 30 and affects the supply of 31 products including cigarettes, fruit juices, wines & spirits and some chocolates.

The amount of excise duty levied on petrol is for instance expected to increase to Ksh.21,522.68 for every 1000 litres from Ksh.20,509.51 or an equivalent Ksh.21.52 per litre.

The effect of the duty adjustment on fuels is expected to be felt during the mid-month maximum pump price review by the Energy and Petroleum Regulatory Authority (EPRA) on October 14.

Meanwhile, the rate of excise duty levied on spirits exceeding six per cent in alcohol strength is expected to rise to Ksh.265.50 per litre from a previous Ksh.253.

KRA has drawn further criticism for raising the excise duty rate without consulting the National Assembly as was prescribed by the Finance Act, 2020.

The rate of excise duty is adjusted once every year in line with inflation as a means to safeguard government revenues earned from the taxation.

Petrol, Diesel, Kerosene prices to rise tomorrow after tax adjustment

Petrol prices are set to rise by Ksh.1.12 per litre effective from Saturday at midnight following the adjustment of the rate of excise duty by the Kenya Revenue Authority (KRA).

Meanwhile, the cost of diesel and kerosene is set to increase by 58 cents respectively.

On Friday, KRA gazetted changes to the annualized excise duty rate, increasing it by 4.94 per cent in line with the average inflation rate across the 2019/20 financial year.

The adjustment triggered the calculation of tax for the supply of 31 consumer products including all three fuel products.

For instance the amount of excise duty levied on regular petrol increased to Ksh.21.52 from Ksh.20.51 while the rate of duty charged on kerosene rose to Ksh.11.37 from Ksh.10.84.

A litre of petrol in Nairobi is now expected to cost Ksh.106.55 while the price of petrol and kerosene will move to Ksh.95.09 and Ksh.83.73 respectively.

In effecting the changes before the routine adjustment to maximum pump prices done on every 14 day of the month, the Energy and Petroleum Regulatory Authority (EPRA) avoided the backdating of the changes which has previously caused confusion in the calculation of tax due to the KRA by oil marketing companies (OMCs).

Fuel prices are set to trend downwards in the October 14 review going by the recent slump in international crude prices across the month of September.

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