MPs send Rotich to drawing board over e-tax system details

The Public Investment Committee (PIC) on Tuesday turned away the Treasury Secretary Henry Rotich and the Kenya Revenue Authority (KRA) Director-General John Njiraini for failure to provide “sufficient” response on the direct procurement of a Sh17.7 billion e-tax system.

Mr Rotich was also asked to prepare a comprehensive response on the controversial construction of the Sh8.6 billion Ronald Ngala Utallii College after he sought more time to get his figures right.

PIC chairman Adan Keynan asked the Treasury secretary to go back and sit with KRA and provide satisfactory response on the implementation of the Exercisable Goods Management System (EGMS) which manufacturers have opposed.

“Now that you have indicated that you are still cleaning up your responses, we want to send you back to allow you some hours to give us a proper document on this matter and return them at 10 o’clock tomorrow (today),” Mr Keynan ruled.

Mr Rotich had informed the committee that the Treasury was still discussing its presentation on both the EGMS and Ronald Ngala Utallii College and therefore needed some time to fine-tune the common position.

Mr Rotich, Mr Njiraini and Treasury Principal Secretary Kamau Thugge are required to present a common position on the EGMS this morning before the committee embarks on separately grilling KRA’s Tender Evaluation Committee, the Negotiation Committee and the Legal Services Committee.

The Kenya Association of Manufacturers (KAM) and the Kenya Private Sector Alliance will also appear before MPs to explain their concerns over the implementation of the EGMS.

Also lined up to testify on Thursday are local representatives of Switzerland based SICPA Security Solutions SA Limited which won the tender for the provision of exercisable stamps. PIC has questioned the award of euros 158,213,898 (Sh15.9 billion at 2013 exchange rate) for the procurement of EGMS to SICPA Security Solutions SA Ltd.

READ: Njiraini on the spot over Sh17.7bn tax tender award

The committee is investigating how KRA procured the tender for the introduction of excise duty stamps through the EGMS for beer, mineral water, juices and soft drinks.

Previously, the authority targeted large consumers including supermarkets and hotel chains for enforcement of the EGMS but it is now bent on involving manufacturers, importers, distributors and retailers.

In June, PIC put Mr Njiraini to task over the tender that was awarded a year and a half into an existing contract of Sh2.28 billion (20.34 million euros). The contract was awarded to the Swiss firm prior to the March 2013 General Election.

The committee is probing the Sh1.50 per stamp tender that the KRA entered into with SICPA, which manufacturers of water, soda and fruit juices have opposed.

Mr Njiraini told the committee in June that Legal Notice No 110 of June 2013 requires that manufacturers and importers defray the cost of the system.

“Subsequently, a stamp price of Sh1.50 was gazetted on November 9, 2013 after KRA had determined the cost of the system through a tender process,” Mr Njiraini said.

He acknowledged challenges in implementing the system, saying the KRA is working with the Treasury to introduce a sliding scale charging mechanism where high value products pay more than low value products.

He defended the contract and denied knowledge of SICPA’s involvement in corruption in Brazil, Morroco, Albania and the Philippines as claimed by MPs. On Tuesday, Mr Njiraini was to provide further information on why KRA decided to procure the EGMS system directly.