Introduction Flashcards
What is excise duty imposed on?
specific goods manufactured in Kenya
specific goods imported into Kenya
specific services supplied in Kenya
Which goods are excisable?
tobacco and tobacco products beer spirits, soft drinks juices, sodas and non alcoholic carbonated beverages food supplements bottled water wines motor vehicles and motor cycles petroleum and petroleum products imported gas cylinders sugar confectioneries and chocolates imported furniture jewelry imported eggs, imported onions, imported potatoes
Which services are excisable?
telephone and internet data
fees charged for money transfer by banks eg swift, rtgs, moneygram
fees charged for money transfer by cellular phone providers eg mpesa
other fees charged by financial institutions
betting, gaming, and lottery
Who is the excise tax impact on and tax incidence?
Tax impact- importer
tax incidence - consumer
What are the features of excise taxation?
indirect tax selective in coverage due when goods enter free circulation assessed by reference to weight, volume, strength, quantity and sometimes advalorem tax small number of taxpayers excise systems worldwide vary
Excise Vs VAT
VAT
charged on all goods and services save those specifically exempted
Charged for purposes of raising revenue
collected through a staged collection process
large number of taxpayers
Excise
charged on selected goods and services
reasons for charging excise differs from product to product
collected once from one registered operator
small number of taxpayers
What are the characteristics of excisable goods?
luxurious have negative externalities addictive/habitual low price elasticity limited consumption
why do governments levy excise taxes?
revenue source health reasons environmental concerns restitution reallocation of resources from rich to poor punish
challenges of using taxes as a means of correcting negative externalities?
difficult to measure the level of negative externality eg cost of second-hand smoking
ineffective if demand is inelastic
cost of administration of the taxes
possibility of evasion e.g illicit trade
Legal Framework for Excise?
Excise duty act excise duty (excisable goods management system) regulations excise duty (remission of excise duty) regulations excise duty regulations KRA Act Tax procedures act TAT act EAC customs management act
medical practitioners act poisons and drugs act alcoholic drinks control act standards act tobacco control act compounding of spirits act
Principles guiding the application of excise act?
excisable goods subject to excise duty unless exempt
excusable goods or services exported from Kenya not subject to excise duty
only persons registered can manufacture or import excisable goods or supply excisable services
Types of excise rates?
specific rate
advalorem rate
composite/mixed rate
Characteristics of ad quantum taxes?
easier to administer
create a more predictable revenue stream
are adjusted for inflation annually
What is the tax point for excisable goods/services?
licenced manufacturer - time of removal of the goods from the premises or upon consumption in the premises
licenced supplier of services - time of supply of service
importer - time of importation
which excisable goods are exempt?
goods consumed in a ship or aircraft for international traffic
goods imported/purchased in Ky by a diplomatic/consular mission/member of family of diplomat
goods imported/purchased in Ky by a foreign government/international org/aid agency
one MV purchased for use by person with disability
goods purchased by red cross/st john’s ambulance
person changing residence/returning resident subject to EACMA
MV owned/used by a deceased person outside Ky
use in the implementation of official aid funded project
