Excise tax collections in eight months of the current financial year fell by Sh4.67 billion compared to a year earlier, reflecting the impact of the increased sale of illicit and counterfeit liquor.
Official Central Bank of Kenya statistics indicates the Kenya Revenue Authority collected Sh104.706 billion in excise duty between July and February compared with Sh109.38 billion the previous year.
The taxman has struggled to collect trade taxes from beer, cigarettes and spirits this financial year due to a rise in production and sale of counterfeit and illicit products. Some cartels, which largely target the spirits segment, have infiltrated the market, including some of the licensed liquor manufacturers.
They process substandard drinks and distribute them using own fake excise stamps, undercutting genuine distillers despite the implementation of the Electronic Goods Management System in September 2016, a section of licensed liquor distillers said mid-January.
The system allows the KRA to monitor and collect production data at the factory level, reducing chances of revenue leakage.
Commissioner-general John Njiraini said in February industry analysts had termed excise duty in six months through last December “unusual”, referring to 16.3, 16.0 and 11.2 per cent drop in duty collections from beer, cigarettes and spirits, respectively.