All manufacturers with a minimum average business turnover of Sh548 daily or Sh200,000 a year must pay a standards tax as the Kenya Bureau of Standards (Kebs) moved to enforce a decades-old levy.
“The obligations under the Standards Levy order only apply to manufacturers whose turnover exceeds Sh200,000 annually,” the regulator said in a notice to manufacturers.
This confirms that many small and medium enterprises, including tailoring and photography studios, fall within the Kebs tax bracket.
Under the Standards Levy (Amendment) Order 1999, each manufacturer is liable to pay the bureau of standards a monthly levy recoverable at source at the rate of 0.2 per cent of the ex-factory price of products manufactured in a month but excluding value-added tax and discounts.
According to the regulation, each manufactured product within a given month is subject to a standards levy of a maximum of Sh400,000 per annum and a minimum of Sh1,000 a month payable through the standards levy account on or before the 20th day of the succeeding month.
“A manufacturer is defined to include a person or persons who produce, process, treat, install, test or operate and use. Persons who manufacture or intend to manufacture are required to notify the Managing Director Kebs” Kebs said in a notice three weeks ago.
The Kebs list of manufacturers includes tailors, printers, publishers, screen printers, photocopiers, and photography studios.
The tax reminder by Kebs comes amid revenue pressure on the State against the backdrop of economic shocks due to the Covid-19 pandemic and the Russia-Ukraine war. The government is pressured to enhance tax compliance and step-up revenue collection to finance public goods and services.
The KRA has resorted to a raft of strategies, including intelligence checks and automation of its revenue systems to boost compliance and collections.
Three weeks ago, the taxman announced that the sale of goods and services covered under the excise tax law including beer, juice, mobile airtime, cigarettes, and petroleum are set to be monitored real-time, making a fresh layer of revenue streams to be administered on a technology-backed platform.
The KRA targets to collect Sh297.2 billion in revenues from excise duty by June and expects to increase collection to Sh521.5 billion in 2027.
