Tailors and photocopier businesses involved in mass production will now be required to pay a monthly levy to the Kenya Bureau of Standards. The levy is pegged at Sh. 1,000 per month or a maximum of Sh. 400,000 annually.
The requirement is based on a KEBS notice reminding manufacturers about the levy under the Standards Levy Order, 1990.
“Ex-factory” refers to the price of goods at the point of production; it is, therefore, a price that excludes added costs due to transportation, insurance, or handling. When goods are sold ex-factory, the extra costs are shifted to the buyer.
The new order will also see Micro, Small, and Medium Enterprises meeting the requirements of the levy. This simply means that activities such as tailoring, weaving, knitting, and photocopying are manufactured under the new Standards Act.
The Standards Act defines ‘manufacture’ to include actions like producing, processing, treating, installing, testing, operating, and using products. Thus, even simple activities are deemed manufacturing, and those engaged in them must register and pay the levy.
Manufacturers are now required to keep detailed records of all transactions that could impact the levy amount and provide these records to KEBS upon request.
“Moreover, persons whose ex-factory manufacture does not exceed Sh. 200,000 are exempted from paying the levy,” PwC Associate Director for indirect taxes Maurice Mwaniki, said in an update by the firm.
KEBS has explained that the new levy covers manufacturing entities in food and agriculture, chemicals, construction, textiles and engineering, including power generation.
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For instance, in the food and agricultural sector, processing of beverages, prepackaging of foods, and meat processing will be considered as manufacturing.
In the chemical sector, printing, publishing and production of organic chemicals and fertilizers are considered as manufacturing.
Failure to comply with the standards levy requirements is an offence. Any failure to pay in time attracts an additional 5% of the amount overdue per month or part of the month.
The levy shall be paid through the iTax system to the Standards Levy Account by the 20th of every month succeeding the month of manufacture.