The Kenya Revenue Authority (KRA) has put out a new tender for a multi-billion-shilling contract to monitor the production of cold beverages such as beer and soft drinks. The move comes as the National Treasury proposes to amend the pricing of excise stamps for alcoholic beverages and other products, which could increase stamp costs by up to 100%. The KRA is seeking Expressions of Interest from suitable qualified bidders with experience in implementing an Integrated Excisable Goods Management System (EGMS). The system is used to monitor manufacturers and authenticate tax stamps for goods, to combat the illicit production of goods and tax evasion.
The Swiss firm SICPA has operated the EGMS system for over a decade, but recently the contract extension came under scrutiny from the National Assembly’s Departmental Committee on Finance and National Planning, who questioned how it was executed. Manufacturers also warned that the proposed increment in the EGMS stamp fees would hurt consumers and manufacturers due to the increased cost of production and finished products amid the rising cost of living. The Minority leader Opiyo Wandayi called for an urgent probe into the system and requested the Office of the Auditor General to audit all funds paid to KRA by manufacturers of excisable goods and account for how these funds have been utilized.
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Wandayi also estimated that the new system would generate over Sh162 billion in the next five years, and the cost will be borne by taxpayers since the cost will be passed on by manufacturers. MPs also raised issues over the projected revenue from the stamps supplied by SICPA following reports they would yield Sh3.6 billion a year or Sh18 billion over the five-year contract period, far below the revenue that the Swiss firm would earn over the contract period.
In conclusion, the KRA has issued a fresh tender for a multi-billion-shilling service contract to monitor the production of cold beverages to combat the illicit production of goods and tax evasion. The current EGMS system is operated by Swiss firm SICPA, whose contract extension has come under scrutiny from the National Assembly’s Departmental Committee on Finance and National Planning, and there are concerns about the proposed increment in the EGMS stamp fees that could increase stamp costs by up to 100%, hurting consumers and manufacturers.
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