The taxman is on the spot as it rolls out new generation stamps on soft drinks and cosmetic products despite a court order suspending them until a judgment is delivered on November 21.
Kenya Revenue Authority (KRA) declared Wednesday as the date its Excisable Goods Management System (EGMS) “goes live” and directed traders to affix their products with the e-stamps.
Through the EGMS, the taxman seeks to raise Sh4 billion from bottled water, juices, energy drinks, soda and other non-alcoholic beverages.
The move has, however, attracted sharp criticism from the affected firms.
“This is a typical case of government institution ignoring the rule of law,” Kimani Rugendo, Managing Director of Kevian Kenya told the Business Daily yesterday. “The court has ruled that the status quo remains. What KRA is doing is illegal and sets a bad precedent.”
Kevian Kenya is one of the 11 manufacturers that have moved to court to contest compliance costs that they say include having their production lines configured to incorporate the stamp fixing machines.
Other manufacturers contesting the e-stamps are Delmonte, Jetlak Foods, PZ Cussons, Blue Plastics and Water Co. Ltd, Aviano Limited, Kenafric Industries, Buyline Industries, Biersdorf East Africa, L’Oreal East Africa and Kenya Tea Packers Limited.
Through a petition filed at the Constitutional and Human Rights Division, the firms have named the Treasury Cabinet Secretary, the KRA Commissioner-General and the Attorney General as respondents.
They have also listed SICPA SA, the firm that was contracted to provide solutions for affixing stamps on products rolling out of production lines, as an interested party.
Manufacturers argue that the additional Sh0.60 per stamp, when added to inflation adjustment of Sh11.75 will increase the cost of production hence raising the consumer prices.
Justice James Makau, in a ruling issued on November 7, directed that the status quo be maintained until a judgment is issued on November 21, 2019.
“It is hereby ordered that the status quo be maintained,” Justice Makau ordered, adding that the judgment, though duly written was yet to be typed “due to pressure of work arising out of two urgent election petitions for which the judgment had to be delivered last Tuesday and Wednesday.”
“The judgment in this matter shall be delivered once typed and on November 21, 2019,” Justice Makau ruled. The manufacturers have since served the Treasury and KRA with the orders.