KRA's new system targets beer, cigarette industries

Glasses of beer.

Kenya Revenue Authority (KRA) has stepped up efforts to bolster its revenue collections as the Government reels under the weight of an ambitious Sh1.8 trillion budget.

The taxman is rolling out an electronic system of monitoring excisable goods, notably wines, spirits and tobacco.

The move is widely expected to curb excise tax cheats who under-value or fail to declare excisable goods.

Caxton Ngeywo, the authority’s Head of Market Surveillance Office, yesterday said implementation of the Excisable Goods Management System (EGMS) in these companies would ensure continuous tracking and tracing of stamps across the supply chain.

Ngeywo said the Government is losing an estimated Sh3 billion annually on excise tax scam through under-claration and  non-declaration of excisable goods.

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He said the authority has so far seized over 300,000 fake products and arrested over 100 suspects.

“People who deal with illicit trade do not believe that this system will catch up with them. They are still in a denial phase,” Ngeywo told reporters during a tour of the East African Breweries Ltd (EABL) plant in Nairobi, one of the companies where the new EGMS system has been installed.

“We have now received requests from the provincial administration and the police that they want to be integrated in the enforcement of the new system.”

The excisable stamps are used by manufactured and imported wines, spirits and tobacco to show tax compliance.

Application, approval and issuance of the stamps are now automated and production accounting is now real time.

Pursuant to the requirement of the Legal Notice No 110 of the Customs and Excise (EGMS) Regulation, 2013, the start date for online activation for all manufacture and import of tobacco products was effective from November 5, 2013.

Ngeywo said already 38 companies have complied with the new system.

These include Keroche Breweries, London Distillers, Kenya Wine Agencies Ltd (KWAL), British American Tobacco (BAT) and Mastermind Tobacco Ltd.

“Initially, we were not able to determine the volume of products produced,” acknowledged Ngeywo. The taxman expects to increase its revenue collections by 20 per cent this financial year (2014/2015).

KRA hopes to collect Sh1.12 trillion in the 2014/2015 fiscal year, leveraging on technology, innovative practices and implementation of staff performance improvement measures.

This comprises of Sh1.05 trillion of exchequer revenue and Agency revenue of Sh65.5 billion. Already, the Government is staring at Sh342.6 billion financing deficit in the current financial year with worrying signs that it might be an arduous task to finance the Sh1.8 trillion ambitious 2014/15 Budget.

Kenya Revenue Authority (KRA) surpassed its revenue collection target by a modest Sh100 million despite a difficult 2013/2014 fiscal year.

The taxman only managed to surpass target after revising downwards the initial targets for the period owing to low economic growth forecast and depressed import trends in 2013.

Data released by the authority shows that the taxman collected Sh963.8 billion against a new target of Sh963.7 billion with the lower than expected performance of the country’s economy wiping out over Sh12 billion worth of projected revenue collections.

The original annual revenue collection target for the fiscal year 2013/2014 was fixed at Sh973.5 billion.