Kenya loses the tax offer on EAC bottle imports
Tuesday, December 15, 2020
Kenya lost an offer to impose a 25 percent excise tax on bottles imported from the East African region after the court ordered the move to be frozen.
The East African Court order is a great relief for local beverage manufacturers affected by the directive, which stipulated that they had to absorb additional costs as they could not pass the costs on to consumers given the low sales during a pandemic year, the manufacturers' petition to the parliament in April.
Previously, the bottles did not have an excise tax, but the government introduced it in April, which resulted in Tanzanian bottle maker Kioo Limited going to court to freeze the tax contained in the Law on Economic Laws (Amendment).
The order to Attorney General Paul Kihara will be a great relief to brewers and other beverage makers using glass bottles who opposed the new tax that came at the height of a pandemic-torn business season.
"The Court granted Motion No. 9, dated 2020, seeking injunctions against the Respondent of the Economic Laws Act (Amendment), which imposed 25 percent excise duty on foreign goods imported into Kenya. In its decision, the court was convinced that the reprimand raised a serious problem in the contested law and that the applicant would suffer irreparable harm. The court ordered the matter to be heard, ”the EACJ wrote after the verdict.
Kioo Limited is a major supplier of glass bottles to the country and had filed the orders, arguing that the tax on bottles from the other EAC states was discriminatory in favor of those made locally in Kenya, in violation of the EAC treaty and customs union Common market protocols.