Beer prices set to rise as Treasury slashes tax relief on locally sourced raw materials

The National Treasury has slashed the remission of excise duty with respect to beer made from sorghum, millet, cassava or any other agricultural produce in Kenya to 60%.



The trim of recoverable excise duty from a previous rate of 80% will see an increase in consumer costs for beer manufactured from locally sourced raw materials.



Exercise duty regulations allow manufacturers of beer to apply for a write off of part of duty levied on products subject to conditions.



For instance, the manufactured beer must have at least 75% content of sorghum, millet, cassava or any other agricultural products grown in Kenya excluding sugar and barley.



The beer in question must also be packed in a pressurized container of at least 30 litres while the beer must not sell for more than KSh100 per litre.



Change in excise duty is expected to affect popular beers such as kegs which are largely manufactured from locally sourced sorghum.



The change in regime represents the latest move by the National Treasury to go after the alcohol industry in a bid to raise higher domestic taxes.



Treasury has further proposed to change the excise duty coverage for alcoholic beverages through the 2020, Finance Bill which seeks to on one hand reduce beers which are subject to excise duty while increasing the number of spirits subject to the duty by virtue of alcohol content.