Beer lovers may have to dig dipper into their pockets in the coming days if the Treasury implements a proposal to raise corporate tax, East African Breweries Limited (EABL) has revealed.
The new proposal seeks to increase tax from 30 percent to 35 percent for firms with annual income of more than Sh500 million.
According to Kenya Breweries Limited Managing Director Jane Karuku, the move will see EABL raise the price of a beer by Sh20.
“Going to 35 per cent will be a shock to us and counter-productive for business. We are among the highly taxed companies in Kenya and in the region,” she said.
“Increasing the tax base means we also have to pass some of it to the consumer. That is going to make Tusker bottle move from retail price of Sh160 to about 180 because the 35 percent works on the whole total drinks.”
Speaking on Wednesday to a local daily, Karuku said out of the Sh160 recommended for a bottle of tusker beer, Sh87 goes to tax.
She said the move to increase the beer price will affect low income earners, who will have no choice but resort to cheap illicit liquor.
She added that increasing tax with the current high inflation rate is deemed to make the drinks expensive, increase cost of doing business and make Kenya lose competitive edge.
The company is set to present on proposed tax reform to the Treasury for 2019/2020 financial year.
In 2018, Treasury introduced changes to the law where excise duty will now be reviewed annually.
The new rates will now depend on the average rate of inflation of the past year.