•This is after the KEBS put out a notice to remind the players in the manufacturing sector of the Standards Levy contained in the Standards Levy Order of 1990.
•In the order Micro, Small, and Medium Enterprises are also required to comply with the Act
Image: JACKTONE LAWI
Tailors and photocopier engaged in large production will now be required to pay Kenya Bureau of Standards a monthly levy that will not be less than Sh1,000 monthly and will not exceed Sh400,000 annually.
This follows a KEBS notice reminding players in the manufacturing sector of the Standards Levy contained in the Standards Levy Order of 1990.
The Order requires each manufacturer to pay to KEBS a monthly levy calculated as 0.2 per cent of the ex-factory price (selling price excluding Value Added Tax (VAT) and any discounts) in respect of manufacture during each month.
"Ex-factory" manufacture refers to the pricing or sale of goods at the point of production, without including additional costs such as transportation, insurance, or handling.
When a product is sold ex-factory, the seller places more logistical and financial responsibilities like transport on the buyer, from the factory to their final destination.
In the order Micro, Small, and Medium Enterprises are also required to comply with the Act since some activities undertaken by MSME, such as tailoring, weaving, knitting, and photocopying are construed to amount to manufacturing pursuant to the Act.
The Standards Act, defines the term ‘manufacture’ to include “produce, process, treat, install, test, operate, and use.
According to the act, these activities, though seemingly simple, involve processes that amount to manufacturing, and those engaged in such activities should register for and pay the levy.
Manufacturers will now be required to maintain complete records of all transactions which may affect the levy payable, and these should be availed upon written request by KEBS.
“Moreover, persons whose ex-factory manufacture does not exceed Sh200,000 are exempted from paying the levy,” said PwC Associate Director for indirect taxes Maurice Mwaniki, in an update by the firm.
KEBS clarified that the companies impacted by the requirement span various sectors including food and agriculture, chemicals, construction, textiles, and construction and engineering including power generation.
For instance, in the food and agriculture sector, activities such as processing beverages, prepackaging foods, and meat processing are considered manufacturing.
In the chemical sector, activities like printing, publishing, and the production of organic chemicals and fertiliser are recognised as manufacturing.
A person who fails to comply with any provision relating to the standards levy is guilty of an offence.
Further, a person who fails to pay the relevant amounts on time will be liable to an additional five per cent of the amounts due per month (or part of the month).
The levy will be payable through the iTax system, specifically the Standards Levy Account, by the 20th of the month following that of manufacture.