This archive report was first published on 28 July 2019.
Kenya Revenue Authority's (KRA) decision to extend the use of excise stamps on bottled water, processed juices, and cosmetics has sparked controversy, with manufacturers accusing the tax authority of overpricing the system and passing the costs to consumers.
The Excisable Goods Management System (EGMS), implemented by SICPA Securities Solutions, was awarded to the Swiss multinational in 2013. However, manufacturers claim that the system has been overpriced, with the burden pushed to manufacturers who pass the costs to consumers in the long run.
According to an analysis by the Kenya Association of Manufactures, the implementation costs favor SICPA, whose expatriates are paid by manufacturers to oversee the system installations in production lines. The analysis also highlights that the cost of the ink and stamps is far too expensive, rendering manufacturers uncompetitive.
Manufacturers are required to install blowers that dry the bottle caps before they are coded, build server rooms, fibre optic cabling, as well as software and hardware synchronisation. The average industry estimate for the cost of getting the OEMs to be present during the installation is around 150,000 Euros (Sh17.3 million) per line.
Critics of the tax monitoring scheme, such as the Institute of Economic Affairs chief executive Kwame Owino, have questioned the new move to expand the scope of EGMS, citing lack of consultation and the unpredictable nature of the excise stamp costs.
