Treasury Cabinet Secretary Henry Rotich and the Kenya Revenue Authority commissioner general John Njiraini have said the implementation of the Sh17.7 billion goods management system is on hold until the affected parties iron out cost concerns. Rotich and Njiraini appeared before the Public Investments Committee to shed light on the procurement of the Excisable Goods Management System.
Through the technology, manufacturers of soft drinks, water and juice will pay for an additional Sh1.50 stamp to be affixed on each of the products. “When manufacturers and other industry players raised the issue of costs, we discussed with the Treasury and decided to put on hold the roll out of the e-tax stamps on bottled water, sodas and other juices,” Njiraini said.
He said the EGMS will continue to apply for beer, cigarettes and wines, which have been stamped from 2003. “We have put on hold the rollout of the EGMS for bottled water, juice and sodas pending consultations. The issue of cost is now being addressed,” Njiraini told the committee chaired by Eldas MP Adan Keynan. Keynan asked whether the KRA continues to implement the project despite protests from manufacturers.
“As the Cabinet Secretary, you have indicated that you are reviewing the costs of the stamps. Will this mean putting a stop to certain aspects of the project implementation? Will that not lead to other cost variations?” Keynan said. Rotich told the committee the Treasury listened to the concerns of the industry and is pricing a model that will ensure low products such as water and soda attract lower stamp costs, while high-end drinks such as beer and wine attract higher costs.
“It is a very fair concern coming from the manufacturers and industry players. We will be issuing regulations to address low-cost products and new stamping charges. We have not had revenue shortfall in the category of excise duty with the implementation of EGMS,” he said. Rotich said the Treasury continues to engage the industry players in order to resolve any outstanding concerns. “With expansion of goods, stamping cost has created a challenge for low-cost items like sodas and juices whose prices are lower than those of beer and cigarettes. We are in contact with KRA to see how to deal with this matter.”
Njiraini defended the EGMS, whose contract was awarded to Switzerland-based firm SICPA Securities SA Ltd, saying it has provided value for money for Kenyans. “This provides us with the best deal given – that I can know the total amount of brands that East African Breweries Ltd has produced today at the click of a button. Apart from the affixed stamps, the system provides us with an electronic tracking platform and production line tracing,” he said.
On the acquisition of the system through direct procurement, Njiraini said KRA renegotiated an existing contract after the expansion of excisable goods through a gazette notice in June 2013.