KRA’s to introduce excise stamps for juice, bottled water

KENYA – Kenya Revenue Authority is to introduce excise duty stamps through the Excise Goods Management System (EGMS) for beer, mineral water, juices and soft drinks.

Verification of excise duty stamps on all alcoholic products not exceeding 10 per cent alcohol volume will also start later this month.

In a statement, KRA said that the EGMS has increased excise tax compliance by 45 per cent. The excise duty stamps, which were rolled out in 2013 and initially focused on tobacco products, wines and spirits, have seen KRA extend its enforcement to other alcoholic beverages to rid the market of counterfeit products.

Previously, the authority 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.

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“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 right from the printing facility in Switzerland to delivery and to the manufacturers,” KRA said.

KRA hopes that after locking out contraband and sub-standard products from the local market, an additional $69.6 million would be raised from the economy.

The system enables KRA to manage the stocks as well as identify the point of loss in case the stamps are lost or stolen. There are plans to use mobile phones to provide similar stamp scanning capacity in order to empower consumers in authentication of goods.

According to the taxman, the introduction of the system follows consistent findings that show some manufacturers and importers have consistently evaded payment of taxes on the excisable goods that they offer for sale.

Evidence has also been found of excisable goods existing in the market whose origin is not known. It is argued that illicit trade or tax frauds cost the government billions of shillings in lost income.

“As well as securing tax income which is rightfully due, the new tax stamp represents a sign of authenticity to consumers,” said Maureen Njongo, chief manager in-charge of marketing and communications at KRA.

The taxman reckons that the enhanced accounting coupled with elimination of tax loopholes is expected to raise revenue by approximately 30 per cent for products not currently under the system with the most promising products beings alcohols and soft drinks.

KRA missed its target for the third quarter of 2014, managing to raise $3.2 billion in tax revenue but still $139.8 million short of the targeted collection.

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The collection saw the income tax grow by 201.8 million to $1.6 billion; excise duty went up by $59.7 million to $400 million and value added taxes expanded by $89.6 million to $858.4 million.

March 30, 2015; http://www.businessdailyafrica.com/Corporate-News/KRA-s-to-introduce-excise-stamps-for-juice–bottled-water/-/539550/2668634/-/9pj7p7/-/index.html

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