When it comes to taxes, water is a topic that often sparks debate. This article aims to clarify the basics. Essentially, natural, unprocessed water from taps or natural sources isn’t taxed. However, once water is purified and packaged for sale, it falls under excisable goods and is subject to excise duty.
What is Excise Duty?
Excise duty is a tax on goods and services produced in or imported into Kenya, as outlined in the Excise Duty Act (2015).
Players in the Water Industry
In the water industry, there are two main players: bottlers and re-fillers. The focus of contention lies with re-fillers, who use automated dispensers or ‘water ATMs’. According to the law, they must apply excise duty as well.
Navigating Tax Reforms: The Finance Act 2020
Recent tax amendments introduced through the Finance Act of 2020 have significant implications for those in the water business, especially for those involved in bottling, including refilling operations. Now, securing an excise license from the Kenya Revenue Authority (KRA) is a prerequisite for both charging and remitting excise duty.
The Vital Excise License
Moreover, water businesses must ensure that each refilled or packaged bottle bears an affixed excise stamp. It is imperative to note that producing excisable goods without the requisite excise license constitutes a legal offense. Equally, purchasing, vending, or possessing excisable goods manufactured by unlicensed entities is unlawful. Merchandise from unlicensed sources may bear counterfeit stamps or lack them entirely.
Excise Stamps
KRA stands as the sole authority entrusted with the issuance of excise stamps. For water bottlers, each excise stamp is priced at Kshs. 0.50. The application process for an excise license can be initiated via the iTax platform, accessible under the registration tab.
Unique Challenge: Water ATMs
In scenarios where water is vended through automatic dispensers, the affixing of stamps on bottles purchased by walk-in customers can present a logistical challenge. To address this, sellers must obtain an excise license and remit Kshs. 5.47 to the KRA for every liter of water sold monthly.
Ensuring Compliance in the Water Business
For those in the water business or thinking of joining, accurate knowledge about water excise duty is crucial. This not only ensures compliance but also avoids potential issues in the future. Stay informed, stay compliant.
How do I get KRA water stickers in Kenya?
Submit application for user credentials
Begin by filling out the application form for user credentials on the KRA website. This form likely contains your personal information and details regarding your business or purpose for obtaining excise stamps. Make sure to provide accurate and complete information.
Obtain user credentials:
Once you’ve submitted your application, the relevant authority will review it. Upon approval, you’ll receive your user credentials. These credentials may include a username and password or any other necessary information for accessing the excise goods management system.
Training on the excise goods management system:
Familiarize yourself with the excise goods management system. This may involve attending training sessions, workshops, or accessing instructional materials provided by the authority. It’s crucial to understand how the system works for a smooth process.
Apply for excise stamps:
After obtaining user credentials and completing the necessary training, you can proceed to apply for the excise stamps. This application likely involves specifying the quantity and type of excise stamps you require.
Obtain notification of approval:
Once your application for excise stamps is processed, you’ll receive a notification indicating whether it has been approved or not. If approved, the notification will provide further instructions on the next steps.
Obtain KRA payment slip:
If your application is approved, you will receive a KRA (Kenya Revenue Authority) payment slip. This slip will detail the amount you need to pay for the excise stamps.
Pay for excise stamps
Using the information provided on the KRA payment slip, make the required payment for the excise stamps. This may involve visiting a designated payment center or using an online payment portal, depending on the procedures in place.
Obtain Excise stamp
Once the payment is confirmed, you’ll receive the excise stamps. These stamps serve as proof of payment and authorization to engage in activities related to excise goods.
