The Kenya Revenue Authority (KRA) has been experiencing a decline in performance in recent times, leaving many people wondering what the cause could be. The KRA has been a top performer for over two decades, but things started to go wrong out of the blue. The article suggests that the government should stop destabilizing the KRA boat without a viable strategy, as this can have a demoralizing effect on domestic revenue mobilization.
One potential cause of the KRA’s decline in performance is the recent decision to amend the pricing of excise stamps for alcoholic beverages and other products. The proposed review could increase the cost of stamps by up to 100%, which could hurt manufacturers and consumers. The Minority leader, Opiyo Wandayi, has called for an urgent probe into the system, citing concerns over the ownership of the Excisable Goods Management System and the potential cost to taxpayers.
Read: KRA Set to Miss its Target of Kshs2.1trillion this Financial Year
Another issue that has raised concerns is the management and extension of the Excisable Goods Management System (EGMS) contract with Swiss firm SICPA Security Solutions SA. The KRA recently issued a fresh tender for a multi-billion-shilling service contract to monitor the production of cold beverages such as beer and soft drinks. The move comes weeks after the taxman and SICPA came under the spotlight over the management and grounds for extension of the contract.
The KRA had adopted the EGMS to facilitate production-level monitoring of manufacturers and field authentication of tax stamps for goods, which enables it to combat illicit production of goods and tax evasion. The initial SICPA contract was signed on April 18, 2013, for a period of five years. The contract was terminated on October 30, 2015, when a new five-year term contract was entered into between KRA and SICPA. Subsequently, two addendums to the 2015 contract have since been executed, raising questions about the transparency of the process.
Read: Parliament Gives KRA 7 Days To Unfold Tax Waiver Beneficiaries
In conclusion, KRA’s decline in performance may have resulted from one bad decision that sent the wrong signals to the entire tax administration system. To restore confidence in the system, the government needs to address these concerns and ensure that the necessary nuts and bolts are in place to operate the tax administration effectively and efficiently.
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