Amendments made to the Finance Act 2020 will postpone the imposition of new tax on at least 31 goods from July 1 to January 1, 2021.
Price increases for goods such as bottled water, beer, juice and fuel will be delayed for six months to offer a reprieve to Kenyans who are already reeling from the realities of lay offs, pay cuts and shut businesses following the Covid-19 pandemic.
The adjustment, announced during the reading of the 2020/2021 budget is in line with the requirement for excise duty to be revised upwards in tandem with the rate of inflation in the 12 months to June or with the measure of the cost of living.
“Annual inflation adjustment is effective from January, 2021,” says the Kenya Revenue Authority (KRA).
The 5.5 percent increase in excise duty was to be effected from July 1 with items such as cigars, cigarettes, motorcycles and fruit juices also set for higher retail prices.
The taxman is now expected to seek the approval of the Treasury Cabinet Secretary before adjusting the specific excise rate. The legal notice will then be moved to parliament for consideration within seven days. Within 28 days of receiving the notice, parliament will choose to either approve or reject the inflation adjustment.
Previously, the KRA commissioner only had to issue a legal notice stating the adjustment and it would become effective.