Economy

Traders, firms risk Sh5m penalty for using old stamps

stamps
john-mutua-img

Summary

  • The penalties follow the expiry of a one-month grace period by the Kenya Revenue Authority (KRA) for use of old generation stamps on the products on Wednesday.
  • KRA started phasing out the stamps last month but gave traders 30 days to clear out stocks that were affixed with the old stamps.
  • KRA says that the new stamps have enhanced security features meant to deter counterfeits in a bid to stem the vice that is estimated to have bled the taxman an estimated Sh70 billion in the last five years.

Traders and manufacturers risk fines of up to Sh5 million or three years in jail or both for using old generation stamps on bottled water, juice, soft drinks, beer, wines and spirits packages.

The penalties follow the expiry of a one-month grace period by the Kenya Revenue Authority (KRA) for use of old generation stamps on the products on Wednesday.

KRA started phasing out the stamps last month but gave traders 30 days to clear out stocks that were affixed with the old stamps.

The window for use of the old stamps on bottled water, juice and soft drinks lapsed on Wednesday while that for beer, wines and spirit packages lapsed on January 5, setting the stage for the penalties traders and manufacturers found in breach.

“A person who contravenes the provisions of paragraph (1) commits an offence and is liable upon conviction to a fine not exceeding five million shillings or to imprisonment for a term not exceeding three years or to both,” reads the regulations.

KRA says that the new stamps have enhanced security features meant to deter counterfeits in a bid to stem the vice that is estimated to have bled the taxman an estimated Sh70 billion in the last five years.

But traders and manufacturers of tobacco and keg beer have until Tuesday next week to replace the old stamps.

The new stamps are part of the Excisable Goods Management Systems (EGMS) which is one of KRA’s key technological investments to weed out tax evasion through use of counterfeit stamps.

In March last year, the KRA nabbed 25,000 pieces counterfeit excise stamps at a water refilling plant in Industrial Area highlighting the gravity of the use of fake stamps.

Excisable tax accounts for 6.6 percent of the total collections from ordinary revenue making the sector a key plank of KRA efforts to meet annual targets.

The taxman marginally surpassed its target from excise tax in the year ended June, raising Sh62.4 billion against a target of Sh62.15 billion.

Besides rolling out the new excise stamps, the KRA is also banking on strengthening its intelligence teams and a tax amnesty programme to weed out cheats and shore up revenue collections.

KRA raised Sh1.67 trillion in the period ended June last year and is banking on the technological investments, a beefed-up intelligence and amnesty programme to unearth tax cheats and collect Sh1.9 trillion in the year to June.

[email protected]