You will have to dig a little bit deeper into your pocket for a bottle of beer if corporate tax rises from 30 percent to 35 percent for firms with more than the annual income of more than 500 million, East African Breweries Limited has warned.
Despite this being the most taxed sector in the country and the region at large, Treasury is looking to implement the proposal that is inspired by an annual review of excise duty. Last year, Treasury introduced changes to the law where the average rate of inflation of the past year will advise the increase or decrease of tax on commodities.
According to EABL, the move by Treasury will directly affect business from the cost of production to distribution and therefore the regional firm is left with no option but to pass that to consumers. With Kenyans now looking at an increase of Ksh20 per bottle, the company’s Managing Director Jane Karuku has pointed out that with the rise in inflation, brands will be expensive and Kenya will lose its competitive edge.
The company has also warned that lack of tax harmonization from county to county is also a threat to the business as county governments differ with the national governments on the sector’s tax laws. These laws also influence the different prices in beers depending on the location.
If the proposal is implemented, the government will part with Ksh97 of the Ksh180 recommended retail price.