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Jewellers in court over duty on rings

NAIROBI
By Kamau Muthoni | August 31st 2021
Beautiful lady in jewellery [Courtesy]

It will now cost you more to buy jewellery. The revelation is contained in court documents seeking to shield consumers from heavy taxation on the items.

At least 37 companies that deal with jewellery are in court seeking to bar the government from demanding excise duty on each jewel they sell.

For example, a ring that goes for Sh30,000 will cost Sh3,000 more. 

On June 29, President Uhuru Kenyatta assented to law Finance Act no 8 of 2021. In effect, it amended the first schedule of the Excise Duty Act no 23 of 2015 by introducing a 10 per cent rate on jewellery, either made locally or imported.

Previously, jewellery was zero-rated.

The jewellers argue that the government is erroneously requiring them to file returns on excise duty over misconception that they are manufacturers or importers.

“The applicants are essentially retailers who only sell finished goods (jewellery) to end-users and have small artisan undertakings mainly repair, designing and or redesigning finished goods (jewellery),” court papers filed by Nyachoti and Company advocates read in part.

Those who have moved to court include Acacia jewellery Limited, Ali Noor’s Wedding Jewellery Limited, Art Oro Jewellers, Bhagwanj Devji and Sons, BIJ Crafts Limited alongside 31 others.

According to them, the law does not envisage manufacturing to include repairs, designing, and redesigning such as jewels.

“It is imperative to note that the usual procedure of manufacturing begins with smelting the ore, making bar or bars, cleaning and hall making and ends with setting (making of a finished item) and polishing,” they add.

According to the court documents, jewellery business in Kenya unlike other industries which are regulated is run without any law in place. 

In their case filed before Justice Weldon Korir, the firms argue that they will now be compelled to set separate workshops for jewels as they run other businesses on the same premises.

“Most jewellery workshops are working with jewellery as well as other goods (watchmaking, sport trophies, clock repair, tableware and others) and it is unrealistic to expect a jeweller to either set up a separate workshop or stop trading with such items. The law stipulates that each premises shall not be used to manufacture more than one class of excisable goods,” court papers read.

Cottage industry

In this case, Zahoorahmed Abdulaziz who is a director of one of the companies, argues that jewellers cannot be said to be manufacturers as their tools are either pliers, small electric motors, files, snips, or screwdrivers. He says it is instead a cottage industry.

Further, Abdulaziz says that if excise duty is payable on jewels, it should then be levied at the source and not at the shop. He notes that the government ignored other players who include supermarkets and gale lodges. 

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