•Lack of awareness and ignorance by a section of consumers continue to give room to illicit trade in the country.
•The country loses more than Sh153 billion potential tax revenue annually to illicit trade, with tobacco and alcohol products among the most illegally sold products.
Image: MAURICE ALAL
One out of three consumers in Kenya are happy to buy taxable goods even if they don’t carry the excise duty stamps as required by law, a market survey shows.
It also shows that three out of every four Kenyan consumers (71 per cent) aer unable to identify the digital tax stamps used to help combat illicit trade.
According to the Consumer Federation of Kenya (Cofek) study, lack of awareness and ignorance by a section of consumers continues to give room to illicit trade in the country.
Through its Stop Crime Kenya (StoCK) campaign, Cofek targets criminals who make a fortune smuggling and selling illicit goods.
The study was conducted between February 21– 25, sampling 100 people on average in 10 counties perceived to have high-level activities in excisable goods, including major urban and border towns.
Goods that don't raise much concern over the Kenya Revenue Authority (KRA) stamps are juices, water, alcohol and tobacco products.
“About twenty-nine per cent (29%) of consumers surveyed don't care if products are genuine. KRA has spent billions on the EGMS in a bid to stem out excise-evading goods flooding the market but the system is failing,” StoCK chairman and Cofek Secretary-General Stephen Mutoro said.
He said criminals are exploiting the gaps to penetrate the market, eating into the share of genuine businesses.
Almost half of Kenyan consumers (48 per cent) don’t know the purpose of digital excise stamps. Of those who do, 44 per cent don’t think they serve a purpose.
“KRA needs to re-think its approach, revise its strategy and reinforce its efforts to combat illicit trade that is robbing the nation of vital revenue,” said Mutoro.
Last year, the Kenya Association of Manufacturers (KAM) warned that the market was being flooded with forged excise stamps.
“Trade in illicit goods, substandard and counterfeit products is a major challenge facing manufacturers, and the country at large,” KAM chief executive Phyllis Wakiaga said.
According to the Anti-Counterfeits Authority(ACA), Kenya has one of the largest markets for fake goods and contraband in East Africa.
The country loses more than Sh153 billion potential tax revenue annually to illicit trade, with tobacco and alcohol products among the most illegally sold products.
A recent survey by ACA revealed that the value of illicit trade in Kenya is at about Sh726 billion.
KRA is using the Excise Goods Management System (EGMS), introduced in 2013, to curb this tax evasion.
Manufacturers and importers of excisable goods are required to affix KRA’s excise stamps on products.
Rogue traders, which KRA says have resources, have been trying to manipulate the system, including importing fake stamps for use in the local market, which has seen the taxman continue to update security features.
The authority has completed the rolling out of the latest version of excise stamps implemented in three phases, the fourth upgrade since the EGMS came into use.
The first phase of the latest version was rolled out on alcohol products in early December, followed by the second phase on soft drinks and water towards the end of December.
The last phase was tobacco and Keg beer products, which were done in February this year.
There are two types of stamps– paper and digital stamps.
Paper stamps are more prone to counterfeiting, according to KRA.
“ We continue to review the security features to ensure we are using the latest technology available,” said Linstrom Kinoti, project manager, Excisable Goods Management System (EGMS).