Everyone has a role in fighting counterfeit excisable products

Commissioner of Domestic Taxes Department, KRA - Ms Rispah Simiyu [File]

The excisable goods sector is one of the most robust and fastest-growing that support the economy. This sector has continued to register growth despite the effects of the Covid-19 pandemic. The growth is both at the industry level and in revenue coffers. The duty levied on excisable products constitutes one of the major revenue streams in Kenya.

The robust growth in the excisable goods sector witnessed over the past years has rendered the sector vulnerable to counterfeiting. Some excisable goods prone to counterfeiting include cigarettes, alcoholic and non-alcoholic beverages. The illicit trade involving counterfeit and contraband excisable products accounts for a substantial loss of government revenue.

The sale of contraband and counterfeit excisable products also pose great health risks to unsuspecting consumers. Unscrupulous dealers not only contravene tax laws governing production and sale of excisable products but also compromise on quality standards.

The existence of counterfeit or contraband excisable products also creates unfair competition to genuine manufacturers and importers of such products, thereby occasioning an uneven operating field. One of Kenya Revenue Authority’s (KRA) tasks is to rid the market of such products.

KRA has continued to enhance market surveillance to get rid of counterfeit and contraband excisable products. KRA has a track and trace system for excisable goods known as the Excisable Goods Management System (EGMS).

EGMS enables KRA to monitor goods right from production stage to the market in real time. For ease of track and trace, the products are affixed with excise stamps at the production stage or upon importation. KRA is the only supplier of excise stamps in the country.

Excisable products are deemed counterfeit or contraband if they bear fake excise stamps or are not affixed with excise stamps altogether. Affixing fake stamps or failure to affix the stamps on excisable goods contravenes the provisions of the Excise Duty Act, 2015 and is punishable by law. The law empowers KRA to arrest and prosecute those who contravene these provisions. In addition, KRA is empowered to compound and destroy any excisable products that do not conform to the provisions of the Excise Duty Act, 2015.

In the 2020/2021 Financial Year, for instance, KRA undertook three major destruction exercises of compounded excisable goods. In May 2021, the Authority destroyed contraband excisable products with a market value of over Sh1 billion. The products ranged from cigarettes, beer and spirits to bottled water. Had the goods found their way into the market, the government would have lost more than Sh400 million in tax revenue.

A consumer interface hosted on a mobile application known as Soma Label supports EGMS. The application enables consumers to verify the authenticity of excise stamps affixed on products. The government cannot win the fight against contraband and counterfeit excisable products alone. All stakeholders and the public should be a part of this endeavour by sharing crucial intelligence.

Ms Simiyu is the Commissioner of Domestic Taxes Department, KRA