Economy

Taxman’s bid to boost revenue gets IMF support

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Kenya Revenue Authority Commissioner General John Njiraini. FILE PHOTO | DIANA NGILA | NMG

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Summary

  • IMF said the taxman’s Excisable Goods Management System (EGMS) had improved revenue collection from a sector plagued by counterfeits and evasions.
  • The authority introduced EGMS in 2013 to safeguard excise tax revenue through application of excise stamps with covert and overt security features.
  • In a report released in January, IMF said there was marked improvement in the first quarter of 2016-17 financial year.

The International Monetary Fund has praised the Kenya Revenue Authority for its innovations to boost tax collection in the beverage sector.

The Fund, in a recent report, said the taxman’s Excisable Goods Management System (EGMS) had improved revenue collection from a sector plagued by counterfeits and evasions.

The 82-page report released in January said there was marked improvement in the first quarter of 2016-17 financial year.

The Fund said receipts of domestic VAT and excise revenues were particularly high, reflecting improvements in revenue administration from i-Tax and EGMS, new excise tax measures, and re-introduction of VAT withholding.

Data from the taxman shows that excise revenue grew by 28 per cent in 2015-16 compared with the previous period, while domestic excise revenue from products controlled under the EGMS system jumped 43 per cent.

The authority introduced EGMS in 2013 to safeguard excise tax revenue through application of excise stamps with covert and overt security features.

The tax is currently applicable to spirits, tobacco, wine, ready-to-drink alcoholic beverages and beers. The excise stamps bear a quick response code that enables distributors, retailers and consumers to authenticate the legitimacy of excisable products using smartphones.

READ: KRA launches digital excise stamps to seal tax leakages

Recently, KRA joined other tax administrations in Uganda and Rwanda to launch a common cargo tracking system for transit goods.

The tax man will be banking on the new reforms to meet a Sh1.3 trillion target set by the Treasury in the current Budget.

The target has further risen to Sh1.5 trillion in the 2017-18 Budget to be read next month.