KRA softens stance on manufacturers over excise tax

The Kenya Revenue Authority (KRA) has adopted a softer stance allowing manufacturers who are yet to get their excise duty licences to continue operating provided they get interim letters of operation from the taxman.

The authority has asked the manufacturers to write to it explaining the difficulties they are facing in complying after which it will review their cases individually and issue the temporary letters of operation.

The agreement with Kenya Association of Manufacturers (KAM) will offer a reprieve to manufacturers whose products would have been taken off the shelves by retailers to avoid conflict with the taxman.

“All manufacturers and importers of excisable goods that are experiencing difficulties in complying with KRA’s requirements due to reasons beyond their control should write to KRA and clearly highlight the challenges and where applicable, attach supporting evidence,” said a statement issued Friday by Alice Owuor, Commissioner of Domestic Taxes and Phyllis Wakiaga, KAM chief executive.

“KRA, through an internal committee will review all appeals from the different companies within the sectors and issue them with letters allowing them to continue operating and also enable them sell goods that were manufactured prior to the public notice issued by KRA on July 24 that listed companies licensed to transact in excisable goods.”

The interim letters of operation will be issued on a case-by-case basis for varying lengths of time considering how much time an individual company needs to meet the remaining requirements.

On Wednesday, KAM said the taxman had denied more than 80 per cent of its members the excise tax licence, effectively prohibiting them from manufacturing and selling excisable goods.

READ: KRA intensifies war with manufacturers over excise tax

The industrialists had blamed the taxman for failure to properly coordinate implementation of the new legal requirements, causing delays in compliance.

KRA introduced new requirements for issuance of excise tax licence at the beginning of the year after some companies had already submitted their applications, forcing them to withdraw and begin the process afresh.

An updated list of companies that have complied with the requirements will be released in a week.

Among the requirements is letters from the county government and Credit Reference Bureau.

The communique added that KAM and KRA will review the requirement for traders to produce a letter from the county government as evidence that a factory is located in a designated area.

KRA had licensed only 85 manufacturers and 48 importers to sell their products by July 24.

KAM has more than 850 members in a sector that contributes about a quarter of the country’s Gross Domestic Product (GDP) and employs over a million people.