SOLUTION

KRA moves to address excise stamp hitch

Authority developing alternatives for manufacturers

In Summary

•According to the manufactures, the ink used by the service provider to print digital stamps poses a challenge to products with dark-coloured caps.

•KRA says it is working on an alternative ink while those willing to change their caps can go ahead.

Hawkers selling soft drinks during a past event in Kakamega /FILE
Hawkers selling soft drinks during a past event in Kakamega /FILE

Kenya Revenue Authority (KRA) has moved to diversify excise stamps standards , an initiative that will help manufactures address huge market returns and seal revenue loss gaps.

This is under the second phase of the Excise Goods Management System (EGMS) on bottled water, juices, and non-alcoholic drinks which came into place on November 13, last year.

According to the manufactures, the ink used by the service provider to print digital stamps on soft beverages and bottled water is of a dark colour, which poses a challenge to manufacturers who have dark coloured caps for their products.

The digital stamp is not visible on such products, the Kenya Association of Manufacturers(KAM) said, resulting to huge market returns as consumers cannot see the stamps.

“We continue to propose that the service provider provides a range of digital stamps ink colours to cater for both dark and bright coloured caps,” KAM chief executive Phyllis Wakiaga said.

KRA has contracted SICPA Security Solutions (SICPA) to install excisable goods management systems incorporated in production lines to monitor throughput, production runs and usage of excise stamps by manufacturers.

KRA Deputy Commissioner Policy & Tax Advisory, Domestic Taxes Department, Caxton Masudi, said the authority is keen to address the challenges manufacturers are facing.

“We have heard that problem and what we have done is to change the ink which is able to be identified under florescent light. If the mark is not directly visible, when you introduce florescent light, you ca still see it because it glows,” Masudi told the Star.

To address this problem further, KRA is engaging two other possibilities he said, one of them being asking companies that are willing to change the colours of their caps to do so.

“Number two, we are working on an alternative ink that will be used by persons who have colours of their caps that are similar to the ink and stamps,” Masudi said.

 

The process for the new product started late last year and was expected to have been rolled-out in March this year, but was disrupted by Covid-19.

“We have now re-engaged and we think this will be resolved before the end of the year,” Masudi said.

KRA had given licensed manufacturers, importers, distributors, and retailers up to February 29, 2020, to clear old stock and comply with the new system, which it banked on to boost revenue collection.

Currently, over 1,000 companies have complied which includes 748 registered manufacturers and 23 importers of bottled water.

For juices, sodas and other non-alcoholic beverages, 57 manufactures and 194 importers have complied, according to KRA.

The taxman targets excise revenues of between Sh3.5 billion to Sh4 billion annually, from a previuos Sh1.4 billion.

SICPA successfully helped KRA implement EGMS on alcoholic drinks and cigarettes in 2013, which helped increase excise tax from Sh700 million to Sh5.6 billion annually.

The second phase has seen revenues from water and non-alcoholic drinks increase 11 per cent, Masudi said.

KRA is keen to increase revenue collection to help bridge budget deficits, which continue to push the government into borrowing, spiking the national debt.