KRA pulls the plug on firms without excise tax licence

Monday August 24 2015

Kenya Revenue Authority Commissioner-General John Njiraini. The taxman has said manufacturers and importers, who have not complied with excise duty requirements, should stop business. FILE | SALATON NJAU |


The taxman has said manufacturers and importers who have not complied with excise duty requirements should stop operations.

According to a joint media communique issued on Friday, the Kenya Revenue Authority (KRA) and Kenya Association of Manufacturers (KAM) said the firms that were not on the list issued last week on Monday should stay out of business until they comply.

Those facing difficulties will be assisted to meet the requirements. Manufacturers finding it hard to acquire licences from county governments have been given a reprieve.

“Any manufacturer or importer dealing in excisable goods, who is not on the list issued on Monday, is effectively not licensed to carry out trade in excisable goods,” said the communique signed by Commissioner of Domestic Taxes, Ms Alice Owuor, and KAM chief executive officer, Ms Phyllis Wakiaga.


KRA and KAM said the initial list constituted of 114 manufacturers and 62 importers who had complied. Another 40 later lodged complaints, out of which 26 were successful while 14 were told that they did not meet the requirements and would be approved later.


Those in the counties must provide approval showing they are located in designated industrial areas.
KRA Commissioner-General John Njiraini said they had agreed with KAM on how to handle the matter to improve compliance.

On the list of uncompliant firms were giant food and beer manufacturing companies such as Flame Tree, Kuguru Foods, Spectre International, Mumias Sugar, Mastermind Tobacco and Keroche Breweries.

“The companies are required to update their taxes and pay outstanding amounts. We have held talks with Kenya Association of Manufacturers to see how these matters can be resolved,” the taxman said.


“Discussions have been going on and so far they are fruitful. We will hold meeting regularly, every two to three months to know what difficulties they have and also track them on monthly and quarterly basis.”

Among the goods that are required to acquire excise duty are beer, opaque beer, potable spirits and wines, ethyl alcohol, tobacco and tobacco products, polythene bags, juices and other non-alcoholic beverages, soft drinks (sodas), cosmetics and bottled water.

Most of the firms listed as not complying said they were still operating as they pursued the compliance certificate.

The regulator introduced new requirements for manufacturers at the beginning of the year when some companies had already submitted their applications, forcing them to begin the process again. This resulted in delays to acquire the licences.


About four weeks ago, Kenya Association of Manufacturers raised the red flag over the tax collectors’ failure to provide more than 80 per cent of its members the excise tax licence, effectively prohibiting them from manufacturing and selling excisable goods.

KRA published a list of 176 manufacturers and importers of excisable goods. The taxman said firms, which were not on the list were prohibited from manufacturing, importing or selling goods.

“Kindly note that it is an offence under Section 185 (1) (d) (iii) of the Customs and Excise Act to be in possession, purchase or consume excisable goods manufactured or imported or sold by unlicensed persons,” Ms Owuor said in a notice.

She further warned that “any manufacturers or importers not listed herein below are not authorised to manufacture, import or sell excisable goods in accordance with notifications earlier sent to them.”

Ms Wakiaga said delays in issuing the licences was due to slow inspection and vetting which is part of the application.


Ms Owuor had warned wholesalers and retailers that goods by the manufacturers not on the list risked being “seized and destroyed at the offender’s cost”.

KAM had cautioned KRA against effecting the order, saying the sector is a major employer and big taxpayer.

“The manufacturing sector is the country’s backbone and if this sector is not well supported the country stands to lose a lot of revenue and millions of jobs may also be at stake,” Ms Wakiaga told Business Daily.

An overhaul of excise tax legislation with the Excise Duty Bill 2015, is anticipated after being introduced in Parliament. The excise duty Bill will also enhance tax on other products like second-hand cars, juices and bottled water.