KRA says revenue up 40pc with new excise stamps

The Kenya Revenue Authority says it has seen a 40 per cent jump in revenue collection after implementation of electronic excise duty stamps.

According to KRA, the Excisable Goods Management System (EGMS), which has since been rolled out on tobacco, wines and spirits has also seen a reduction in revenue leakages. KRA’s Commissioner for Domestic Taxes, Alice Owuor said this has stemmed proliferation of contraband tobacco, wines and spirits products.

The excise duty stamps, rolled out in 2013 and initially focused on tobacco products, wines and spirits, have since been expanded to cover other beverages including beer, sodas and other carbonated soft drinks, juices and bottled water. “The introduction of the system follows findings that show some manufacturers and importers have consistently evaded payment of taxes on the excisable goods they offer for sale,” said Owuor.

The system provides online ordering and approval for delivery. The details of the excise stamp are captured in the system at the time of printing and are tracked along the supply chain. Owuor noted that the country’s budget deficit is projected to decline further to 5.4 per cent and 4 per cent in 2016/17 and 2017/18, respectively. Declining national deficits and thus reduced domestic borrowing will ultimately have a positive impact on business expenditure and investment, she added.

Guilty of an offence

Kenya is not the only country to have adopted this system. There are more than 30 countries in the world that have implemented the system including in the United States of America (USA), Turkey and Brazil. However, the taxman has had difficulties in the adaptation of brand designs to effectively incorporate EGMS markings.

She added that trade in illicit excisable goods, ultimately impacts negatively to national development. Indeed, “Tax authorities from developing countries, including Kenya, continue to grapple with unique challenges that require innovative management practices, to plug revenue leakages,” she said.

The implementation deadline for manufacturers and importers of beer was February 1, 2016. Consequently, KRA issued a Public Notice notifying manufacturers, importers, distributors, retailers of beer as well as the general public that old stocks of beer manufactured or imported and already in the market before February 1, 2016 without excise stamps/codes affixed on, will only be allowed in the market until March 31, 2016.

“After the March 31, 2016 deadline, distributors and retailers will be required to declare and handover all beer products bearing no stamps/codes to the respective manufacturers or importers for affixation of excise stamps/codes. Any person who manufactures, imports, distributes, retails or is found in possession of beer on which excise stamps have not been affixed in accordance with the law shall be guilty of an offence,” she added.

Previously, the taxman targeted large consumers including supermarkets and hotel chains for enforcement of the EGMS but it is now bent on involving manufacturers, importers, distributors and retailers. “”It is instructive to note that KRA is currently engaged in consultations with the stakeholders under the auspices of the Kenya Association of Manufacturers (KAM) on the implementation modalities,” Owuor added.