Duty remission on keg, sorghum beers extended
The government has extended the tax remission on beer made from sorghum and cassava despite changes to the Finance Act 2016.
According to the National Treasury, keg beer’s tax remission was initially covered in the Alcohol Drinks Control Act and the Excise Duty Act with changes in the finance act meant to streamline taxation on the beer.
East African Breweries Limited (EABL), which produces the Senator Keg beer made wholly from sorghum, is the biggest beneficiary of the taxation law.
Through its subsidiary East Africa Malting, EABL has 30,000 contracted sorghum farmers and is expected to spend Sh950 million in buying the grain.
Senator outsold EABL’s flagship product Tusker in the last financial year in terms of volume, focusing more on the low end consumers.
East African Cereal Growers Managing Director Gerald Masila said the government stood to lose significantly, while the farmers risked losing their source of income.
“We are asking the government to gazette the law ensuring farmers are able to get back to their farms to earn a sustainable income. Farmers concerns remain over what the fate of taxation will be; there’s definitely a need to guarantee the ready market for their produce,” Mr Masila said.
The introduction of 50 percent excise duty on sorghum based beer in the 2014/2015 budget saw EABL cancel contracts with farmers and suspend production of Senator keg arguing it did not financial sense.
The excise duty act grants a remission of duty at the rate of 90 percent on beer made from sorghum, millet or cassava grown in Kenya.
East Africa Maltings recently recruited 12,000 farmers in Kitui, Tharaka and Embu to grow sorghum and millet.