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KRA launches phone app to weed out fake excise stamps

BUSINESS NEWS
By Moses Michira | September 6th 2016

NAIROBI: The Kenya Revenue Authority has introduced a mobile application that will enable compliance officials and consumers identify fake excise stamps.

This is part of the taxman’s wider scheme to tackle tax evasion and counterfeiting of heavily taxed products.

KRA’s tool will work with a new generation of stamps that bear a Quick Response Code (QRC) that will be affixed to all tobacco, beers and other alcoholic drinks.

"The verification of the new excise stamps using a smartphone app will enable consumers to verify products, hence guaranteeing their safety,” said Benson Korongo, the commissioner, Domestic Taxes Department at KRA.

Some traders have been using imitations of excise stamps on both legitimate and counterfeit products to avoid paying millions in taxes. It is not possible to tell fake from original stamps in a visual inspection of the stamps.

“Through the system, we can ensure that counterfeit products that are harmful to consumers don’t flow through the distribution chain,” Mr Korongo said.

Old-generation paper stamps affixed on wines, cigarettes, beers and spirits will, however, remain valid until all products on which they have been affixed are consumed.

In the planned upgrade, KRA inspectors, sellers and ordinary consumers can download the application to their smartphones and use it to scan and determine if stamps are genuine.

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Manufacturers of excisable goods are also able to trace their produce through the distribution chain until they reach retailers’ shelves.

The new excise stamps are part of the rollout of the Electronic Goods Management System (EGMS), which is aimed at combating illicit trade and sealing revenue leakage loopholes, therefore enhancing compliance.

It is also the first time that KRA has enforced the use of excise stamps on beer and mineral water, even though the measures have been taken for spirits.

As a pointer to how big the excise duty is, a 500ml bottle of beer attracts Sh50, while a Sh5 levy is slapped on every litre of mineral water.

In the last financial year, excise revenues collected by KRA grew by 28 per cent. In the same period, domestic excise revenue from products controlled under EGMS grew by 43 per cent, contributing an additional Sh8 billion, the highest ever recorded annual growth.

Further, in the period 2010-2016, products under the stamping and EGMS regime recorded stronger growth as compared to non-stamped products.

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