Excise Duty & Miscellaneous Fees and Levies. Mbiki Kamanjiri

Transcription

1 Excise Duty & Miscellaneous Fees and Levies Mbiki Kamanjiri

2 History of Excise 1972 Customs and Excise Act, Cap 472. Excise Regulations 2013 Finance Act Mar 2017 Remission Regulations EACCMA Repeals CEA in 2004 Excise Duty Act 2015 Assented to on 16 Nov 30 Mar 2017 EGMS Regulations

3 What to get at the end of this session WHAT? WHO? WHEN?

4 Introduction Excise Duty is a tax on tax on the importation or local manufacture of certain products and supply of excisable services Reasoning for Excise Tax Increase Revenue - Items targeted have a low price elasticity Sin Tax - To influence consumer behaviour and discourage consumption Common and widespread belief among countries that the financial sector should contribute its fair share in remedying the damage arising from the financial crisis The manufacturer/ supplier of excisable supplies usually shift the tax by raising the price paid by the buyer

5 Introduction Who should collect and account for Excise duty? All manufacturers, providers and importers of excisable goods and services should collect and account for excise duty manufacture includes Manufacturing (a) the production of excisable goods; (b) any intermediate or uncompleted process in the production of excisable goods; or (c) the distilling, rectifying, compounding, or denaturing of spirits; A license (renewable annually) required for manufacture of excisable goods and importers of excisable goods (requiring excise stamps)

6 Rates of Duty specific (per quantity) rates prevalent in the Excise Act 2015) or ad-valorem (percentage based on value) e.g Food supplements & cosmetics 10%, motor vehicle 20%, excisable services 10%. Excisable Value (for ad-valorem base) Imported goods = Customs value + Import Duty Locally manufactured = Ex-factory selling price (Excluding VAT and cost of Excise stamp and returnable containers) The CS by order in the gazette may vary the duty rates by 10% or adjust the specific duty rates for inflation

7 Tax Point Imported goods Point of entry Locally manufactured At removal from factory Services Payment or provision Returns On or before 20 th of the following month Application for licensing and/or registration must be done on itax for activation of online filing

8 Exemptions Exports Destroyed approved by Denatured spirit, the Commissioner gasohol or heating Lost or destroyed unavoidably Beer or wine* Disabled person s MV * As provided by Second Schedule of the Act

9 Refunds Damaged goods, stolen goods, returned goods Spirits or illuminating kerosene that have subsequently been used to manufacture unexcisable goods Bad debts The application for refund within 12 months from the earlier of: 3 years from sale of goods or services; or purchaser becoming legally insolvent Within 12 months

10 Excise Duty (Remission of Excise Duty) Regulations 2017 Repeal the 2013 regulations Remission of excise duty at 80% with respect to beer made from agricultural produce grown in Kenya except barley. Monthly return filing obligation indicating quantity and type of raw material used, manufactured and sold beer. tax compliance valid excise licence fully installed EGMS pressurized container packing selling price under Shs. 100 per litre regulatory compliance At least 75% local produce apart from sugar Agriculture

11 Excise Duty (Excisable Goods Management System) Regulations, 2017 Excisable goods to be affixed with excise stamps ((sec 28) Cabinet Secretary may in the regulations specify the excisable goods to which excise stamps shall be affixed; the systems for management of excise stamps and excisable goods: the place and time of affixing excise stamps. Introduction of new generation excise stamps New generation stamps currently used on alcoholic drinks and cigarettes Implementation of extended programme to other excisable goods as required in the law underway ( e.g bottled water, soft drinks and cosmetics )

12 Excise Duty (Excisable Goods Management System) Regulations, 2017 New digital stamps can be printed on the goods Application 60 days before manufacture or importation CG may require 6 month forecast 60 days before the month in which the stamps are required Place stamps to be affixed: in case manufacture: at production vs importation: at least 5 days after clearance

13 Excise Duty (Excisable Goods Management System) Regulations, 2017 Maximum fine for offences under EGMS regulations revised from KES1.5M to KES 5M. Commissioner shall seize excise stamps, equipment, vehicles or goods where the vehicle is used in storage, concealment or transportation of excisable goods in contravention with regulations. General offence minimum fine of KES. 100,000 removed.

14 Excise Stamp Fees Category Cigars, cheroots, cigarillos, containing tobacco or tobacco substitutes Cigarettes containing tobacco or tobacco substitutes Other manufactured tobacco and manufactured tobacco substitutes; homogenous and reconstituted tobacco ; tobacco extracts and essences Wines including fortified wines, and other alcoholic beverages obtained by fermentation of fruits Compounded spirits of alcoholic strength exceeding 10% Spirituous beverages of alcoholic strength not exceeding 10% Beer, cider, perry, mead, opaque beer and mixtures of fermented beverageswith non-alcoholic beverages Fees (KES) 2.8 per stamp 1.5 per stamp

15 Excise Stamp Fees Category Fruit juices (including grape must), and vegetable juices, unfermented and not containing added spirit, whether or not containing added sugar or other sweeting matter Sweetened or flavoured water and non-alcoholic beverages Cosmetics and beauty products of tariff heading 3303, and 330 Mineral water and aerated water of tariff Fees (KES) 0.6 per stamp 1.5 per stamp

16 EGMS Developments Feasibility study going on the roll out of excise stamps Digital and adhesive excise stamps currently available EGMS identifies brand, packaging size/volume and packaging type and other product specific information EGMS automated reporting (compliance, econometrics, interactive monitoring and controls (risks and key indicators) plan to introduce excisable goods market surveillance application to enable consumers authenticate excised goods via phones

17 Excise Duty rates Goods Beer Wines Spirits Cigarettes Cigars, cheerots, cigarillos Cosmetics and beauty products Electronic cigarettes Electronic cigarettes cartridge Juices Mineral and aerated water Rate (KES) 100 per litre 150 per litre 175 per litre 2,500 per mille 10,000 per kg 10% Food supplements 10% 3,000 per unit 2,000 per unit 10 per litre 5 per litre

18 Excise Duty rates Goods Rate (KES) Premium petrol per 1,000 litre at 20degC 19,895 Motor vehicles excluding school buses for use by public schools and locally assembled motor vehicles excluding locally assembled vehicles Mobile cellular phone services, money transfer services and other fees charged by financial institutions 20% 10%

19 Excise Duty rates Goods Excise Duty Act 2015 Finance Bill 2017 Cigarettes without filters Spirits liqueurs and other spirituous beverages of alcoholic strength exceeding 10% 2,500 per mille 1,800 per mille 175 per litre 200 per litre Illuminating Kerosene Registration/licensi ng requirement and refund provided Plastic paper bags 120 per kg Banned

20 Licensing The license issued to a manufacturer of excisable goods specifies the following: The class/classes of excisable goods The factory/factories at which manufacturing will take place The factory shall only be used for manufacture of class/classes of excisable goods specified in the license. What happens to manufacturers of both excisable and non excisable goods in same factory?

21 Licensing rejections Convicted of a tax offence Convicted for fraud Declared bankrupt, insolvent or in process of liquidation

22 Cancellation of a license Cease to manufacture excisable goods Pay all excise duty due on hand Dispose of all excisable goods and materials in the factory Commissioner may remove the excisable goods in the factory to another designated place or take control of the factory and excisable goods to protect revenue. The Commissioner prior to cancellation of a license shall give 21 days notice to the licensee and indicate grounds upon which such intended action shall be taken. Within 14 days the Commissioner shall acknowledge action taken by licensee

23 Deemed removal A manufacturer who cannot account for any quantity of excisable goods manufactured shall be deemed to have removed those goods from excise control in the month in which the discrepancy arose In case of any discrepancies, the manufacturer should notify the Commissioner of the cause of these discrepancies

24 Annual inflation adjustments The rate of excise duty will be replaced every year by the rate calculated as: A (1+B) Where: A is the rate excise duty on the day immediately before the adjustment day (1 July of every year); and B is the adjustment factor for the adjustment day calculated as the average rate of monthly inflation of the preceding financial year *Annual inflation adjustments not yet gazetted for the fiscal year starting 1 July 2017

25 Excisable services (Other fees) Prior to enactment of the Excise Duty Act, 2015 include any fees, charges or commissions charged by financial institutions, but does not include interest on loan or return on loan or an insurance premium. Later amendments includes any fees, charges or commissions charged by financial institutions relating to their licensed financial institutions, but does not include interest on loan or return on loan or an insurance premium or premium based or related commissions

26 Fines and Penalties Offense Penalty Provision Late submission of tax return on account of employment income The higher of 25% of the tax due or KES 10,000 TPA Late payment Simple interest 1% pm TPA Undertaking excisable activity without registration Licensing, excise Stamps and excise control offences Double the amount of tax S 38 Imprisonment not exceeding 3 years/ fine not exceeding Kes 5,000,000 (or 3 times the excisable value of related goods if higher) or both. S 41

27 Miscellaneous Levies 27

28 Export Levy A levy imposed by a country to make exportation unfavorable and promote local consumption Shall also be subject to inflation adjustment Hides and skins, furs, Scrap metal 80%, or $0.52 per kg 20%

29 Import Declaration Fee On all goods for home use imported into the country Rate of 2% of customs value Or KES 10,000 East African Community Duty Remission Scheme 10% of the collections goes to the AU or any other international organisation to which Kenya has a financial obligation.

30 Railway Development Levy On all goods for home use imported into the country At the rate of 1.5% at the point of entry To fund the SGR Shall be paid into the Railway Development Fund

31 Exemptions Sales to the SEZ and EPZ Official aid funded projects. Gifts or donations to registered charities Samples which have been ascertained by Commissioner have no commercial value House hold and personal effects provided qualify for exemption from duty under EACCMA

32 5 th Floor, Avocado Towers, Muthithi Road, Westlands, Nairobi Kenya T F Mbiki Kamanjiri Manager Tax Consulting Services Cell E ; mbiki.kamanjiri@ke.gt.com