KRA Wants To Start Taxing Keg

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The Kenya Revenue Authority (KRA) is lobbying to start taxing the popular and low-cost ‘Keg’ alcoholic drink which is currently exempted from excise tax. If this happens, you will obviously add a few more shillings to pay for your tin of Keg.

KRA argues exempting non-malt beer from excise tax was meant to discourage consumption of illicit drinks, but has rather continued to undermine the uptake of other taxable beers. This has led to a slower than expected growth in domestic exercise duty.

This shift in consumption patterns for beer to non-malt containerized drinks is what KRA says has hurt revenue collection performance thus the prospects to tax Keg. The taxman says he has lost KES 11 billion worth of possible revenue because the VAT Bill 2012 was not passed.

KRA is however behind its set target blaming this on economic conditions that fell short of expectations in the first half of the year. For instance, GDP was expected to grow by 5.5% but grew at 4.7% while inflation averaged 5%  out of a target of 9.8%.