Wine prices are expected to rise while the cost of beer would fall under new proposals by the National Treasury, which has set excise duty on beverages based on their respective alcohol content by volume.
The proposed Tax Laws (Amendment) Bill, 2024 seeks to restructure the rate of excise duty on wine and beer in a move that will see the price of wines go up while the cost of beers and ciders with alcohol content not exceeding six percent will fall.
“The Bill makes the following amendment, restructure in the rate of excise duty for wines including fortified wines and other alcoholic beverages obtained by fermentation of fruits from Sh243.43 per litre to Sh22.50 per centilitre (10 millilitres) of pure alcohol,” the National Treasury said on Friday.
The average alcohol content of wine ranges between 11 percent and 13 percent. Low-alcohol wines have an alcohol by volume (ABV) of 10 percent or less while high-alcohol wines can exceed 20 percent.
A one-litre wine bottle with 20 percent ABV, for instance, will attract Sh450 in excise duty from Sh243.43 at present, an increase of Sh206.57.
However, the new proposals will offer relief to consumers of beers and ciders with up to six percent ABV, as the effective excise duty paid on the beverages will fall.
“The Bill also makes the following amendment: restructure taxation of alcoholic beverages by reviewing the excise duty rate from Sh142.44 per litre to Sh22.5 per centilitre of pure alcohol for beer, cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of an alcoholic strength not exceeding six percent,” the exchequer added.
Excise duty on beer brands such as Tusker and White Cap (500ml bottles) with an ABV of 4.2 percent each will, for instance, fall from the current Sh71.22 to Sh47.25.
The Bill further proposes to waive excise duty on spirits made from sorghum, millet, cassava or any other agricultural products with the view to support farmers.
Manufacturers of alcoholic beverages are also set for relief as the exchequer proposes to extend the period for the payment of excise duty from 24 hours to the fifth day of the following month.
“It is proposed to increase the period for payment of excise duty relating to alcoholic beverages from 24 hours to the fifth day of the following month. This is to ensure ease in the administration of the tax for alcoholic beverages and minimise cash flow challenges,” the National Treasury said.
The Bill does not mention the treatment of excise duty rates for spirits and beers exceeding six percent in ABV.
Setting of excise duty rates for alcoholic beverages on the basis of alcohol content by volume is part of the IMF-backed recommendations to implement a progressive tax regime in the country.
