New tax on beauty and cosmetic products kicks off on July 1

Millions of consumers of beauty and cosmetic products in the country could pay more for the goods they seek to boost appearances, with the Kenya Revenue Authority’s (KRA) intention to roll out excise stamps for the products starting on July 1.

This follows greenlight by the court last month for the authority to proceed with public participation for its planned raise of excise stamp charges on at least 14 categories of excisable goods. The High Court dismissed a case by the Law Society of Kenya (LSK) seeking to stop KRA from implementing the increase in excise stamp rates on the products, which paved the way for KRA to proceed with activities toward the action.

In the Excise Duty (Excisable Goods Management System- EGMS) (Amendment) Regulations, 2023, KRA proposed to raise excise stamp charges for beauty and cosmetic products from Sh0.6 to Sh2.5 per stamp, a 316 percent raise.

“To ensure a smooth rollout, KRA invites manufacturers, importers, and other stakeholders involved in the distribution and supply of cosmetics and beauty products for a virtual stakeholder engagement on May 3, 2023.

“Manufacturers of cosmetics and beauty products who have installed automated production lines are requested to contact KRA to facilitate a technical site visit for confirmation that their automated lines meet requirements for installation of EGMS,” KRA stated in a public notice Wednesday.

The taxman’s growing interest reflects a rapid growth that has been witnessed in Kenya’s beauty industry- both in local manufacturing and imported products- that provides a new revenue stream for a government keen to grow taxes.

Official data show the industry has grown by over Sh10 billion over the past decade as more Kenyans embrace the use of makeup and other beauty products. Imports of essential oils and perfumes alone rose from Sh21.9 billion to Sh26.3 billion between 2017 and 2021, data from the Kenya National Bureau of Statistics show.

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