KRA to set minimum prices for select alcoholic beverages

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The Kenya Revenue Authority (KRA) has considered setting minimum prices for specific alcoholic beverages after new changes in the Finance Bill 2023 are effected.

The changes which the National Assembly adopted were introduced by the Finance and National Planning Committee.

Under the changes, the 2010 Alcoholic Drinks Act will now form part of the written laws on revenue following the inclusion of the legislation as part of 1995 Kenya Revenue Authority Act.

They give the taxman the legal mandate to set and make changes to the pricing of alcoholic beverages through gazette notices.

Further amendments were made to the 2010 Alcoholic Drinks Act introducing minimum input cost as a definition to mean input cost published by KRA through excise regulations.

Additional changes to the Act bar persons from selling, manufacturing, packing or distributing alcoholic drinks at a price below the minimum input cost.

While moving the amendment, Finance and National Planning Committee chairperson Kuria Kimani noted KRA would be well placed to regulate the minimum cost of alcoholic drinks given its depth on the pricing of ethanol, the main input in the manufacture of the beverages.

“This clause sets the minimum input cost price for alcoholic drinks in the country, which means that the Kenya Revenue Authority will have the mandate of setting the minimum price a particular drink may be set at. This aims to get rid of illicit alcohol sold to our young people,” he said.

According to a recent report by Euromonitor Consulting, the government loses an about Sh71 billion ($506 million) in taxes every year from the sale of illicit alcohol.

Persons found guilty of selling alcoholic beverages below the prescribed minimum cost will be liable to fines not exceeding Sh50,000 or an imprisonment term not exceeding six months, or both. Persons involved in the alcohol value chain are also restricted from selling alcoholic drinks in containers of less than 250mm.