NAIROBI, Kenya – The Kenya Bureau of Standards (KEBS) has announced that all players in the manufacturing sector, including small-scale operations like tailoring and photocopying, will be required to pay a monthly standards levy.
This fee, ranging from a minimum of Sh1,000 to a maximum of Sh400,000 annually, is mandated by the Standards Levy Order of 1990.
The levy is calculated as 0.2% of the ex-factory price, which is the selling price excluding Value Added Tax (VAT) and any discounts.
This means that even seemingly simple activities, when considered under the broad definition of ‘manufacture’ in the Standards Act, must comply with the levy requirements.
The Act defines ‘manufacture’ to include a wide range of activities such as producing, processing, treating, installing, testing, operating, and using goods.
This move by KEBS aims to standardize the quality of goods produced across various sectors, including food and agriculture, chemicals, construction, textiles, and power generation.
For example, in the food and agriculture sector, the processing of beverages, prepackaging of foods, and meat processing are all classified as manufacturing activities.
Similarly, in the chemical sector, activities like printing, publishing, and the production of organic chemicals and fertilizers fall under this classification.
Micro, Small, and Medium Enterprises (MSMEs), such as those involved in tailoring, weaving, knitting, and photocopying, are not exempt from this requirement.
They are now obligated to register with KEBS and pay the applicable levy. The order has raised concerns among these small business operators, many of whom were unaware that their activities would be considered manufacturing under the law.
Moreover, manufacturers are required to maintain detailed records of all transactions affecting the levy payable. These records must be available for review by KEBS upon request.
Non-compliance with the levy payment or record-keeping requirements can lead to penalties, including an additional charge of five percent per month on the overdue amounts.
Maurice Mwaniki, Associate Director for indirect taxes at PwC, clarified that businesses whose ex-factory manufacture does not exceed Sh200,000 are exempt from paying the levy.
However, the compliance burden remains significant for many small businesses. The levy is payable through the iTax system by the 20th of the month following the manufacturing activity.
