The Water Bottlers Association of Kenya (WBAK) estimates that the retail price of bottled water could go up by 80 percent if the Kenya Revenue Authority (KRA) implements the Excisable Goods Management System (EGMS) for bottled water and non-alcoholic beverages.
In a statement, WBAK chairperson Henry Kabogo said that implementation of the system will push SMEs out of business, since it will require them to automate their production which could prove a tall order.
Currently, a 20-litre bottle of water is estimated to cost between Ksh250 and Ksh350, but upon implementation of the system the retail price will shoot to between Ksh450 and Ksh550, for a refill, according to WBAK. The association estimates that the same volume will retail between Ksh650 to Ksh700, with disposable bottles.
“We are glad that parliament through Public Investment Committee report that looked into EGMS matter even recommended that the product Excise duty as initially envisioned in Excise Duty Act 2015. Plain water never attracted SIN tax on purified drinking water under code 2201.90.00 as is the case with Tanzania, a member of EAC that allows its citizens to enjoy the essential without SIN tax,” noted Kabogo.
WBAK says that implementation of the EGMS especially on bottled water could affect at least 30,000 people who directly and indirectly depend on the business to earn a living.
In June, the Treasury announced that he listed goods, including bottled water, whether imported or manufactured locally, were to be affixed with excise stamps as from Saturday, September 1.
However, KRA could not manage to implement the same hence postponed it to a later date.
“KRA postponed the implementation of Excisable Goods Management System which is a tool for accounting for excise production and traceability of excisable goods. This is not a tax. Taxes are imposed by law and become effective by way of statute. KRA has no mandate to defer implementation of the same,” noted KRA.
KRA says the postponement was to enable manufacturers to complete installation of the system before a new go live date is announced.
According to the taxman, EGMS system on production lines is ongoing at manufacturers premises and so far 91 percent of automated lines have been installed.