“A sharp decline in keg beer demand was witnessed between June 2013 and September 2015, when the national government reduced the excise duty remission from 100 per cent to 50 per cent.
Illicit brew consumption increased to the unprecedented levels of 60 per cent of all alcohol consumption in Kenya at the time,” Kenya Breweries Ltd (KBL) wrote to Treasury in response to the looming change of duty remission from the current 80 to 60 per cent.
With the remission being cut to 60 per cent, demand is expected to drop by around 84 per cent, and thousands of jobs in the value chain are at risk, which will inevitably cut government revenues, including from income tax.
These changes in tax for keg beer come after a 25 per cent excise duty on imported bottles was imposed last month, further straining the alcohol sector.
A similar change in taxation of other alcoholic products from one based on the sale price to one based on volumes produced has continued to haunt Treasury since 2015.
