This is because East African Breweries Limited (EABL) is thinking of raising beer prices in the wake of tax increases and drought.
Kenya Breweries Limited Managing Director Jane Karuku EABL said the brewery could increase prices of products if the Treasury implements a proposal to raise the corporate tax from 30 percent to 35 percent for firms with an annual income of more than Sh500 million.
“Going to 35 percent will be a shock to us and counter-productive for business. We are among the highly taxed companies in Kenya and in the region,” she said.
Ms. Karuku added that a tax increase will be a shock to the business, given that the sector is already among most of the heavily taxed in the country.
“Increasing the tax base means we also have to pass some of it to the consumer. That is going to make Tusker bottle move from a retail price of Sh160 to about 180 because the 35 percent works on the whole total drinks,” said Karuku.
She spoke on Wednesday ahead of the company’s presentation on proposed tax reform to the Treasury for 2019/2020 financial year.
The Treasury last year introduced changes to the law where excise duty will now be reviewed annually, with the rate pegged to the average rate of inflation of the past year.
Ms. Karuku told the press that with inflation rising, a tax rise would make brands expensive, increase cost of doing business and make Kenya lose its competitive edge.
Of the Sh160 recommended retail price of a Tusker brand Ms. Kuruku said, Sh87 goes to tax and that any further increment in excise and corporate tax will drive low-end customers to illicit brews.