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Kenya

KRA bid to impose excise tax on soft drinks, cosmetics unconstitutional – court rules

KRA was obligated to craft and implement a meaningful programme of public participation and engage stakeholders, the court said.

NAIROBI, Kenya, Mar 12 – Kenya Revenue Authority has suffered a blow in its bid to increase tax collection after the high court termed as unconstitutional KRA’s move to impose excise duty on bottled water, juices, soda, other non-alcoholic beverages, and cosmetics.  

Judge John Mativo has ruled that the legal notice issued last year March was enacted in a manner that was inconsistent with the Constitution as there was no adequate public participation.

The judge further says KRA was obligated to craft and implement a meaningful programme of public participation and engage stakeholders.

“Imposition of excise duty premised on the said legal notice was not promulgated in a manner that conforms to the law,” he declared.

Justice Mativo reasoned that taxation should be imposed only in accordance with national values and principles of governance among them equity and fairness in the distribution of tax burden.

The Judge has issued the declaration against KRA following activist Okiya Omtatah’s case.

The items in question whether imported or manufactured locally were to be affixed with excise stamps from Wednesday, November 1, 2017.

Consequently, a tender awarded to a Switzerland based firm called SICPA Securities to affix the excise stamps has been quashed.

Omtatah had challenged the tax imposition insisting that it should be done on goods and services that can pose harm to the consumer.

KRA on its part had opposed the case and asked it be dismissed on grounds that the Court lacks the mandate to determine the dispute.

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It was KRA’s argument that the Public Procurement and Administrative Board should handle the issue and that adequate public participation was done.

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