advertisement

Market News

Traders of fakes face Sh5m minimum fine

Employees of Envirosafe throw counterfeit goods into an incubator for burning last month. PHOTO | FRANCIS NDERITU | NMG
Employees of Envirosafe throw counterfeit goods into an incubator for burning last month. PHOTO | FRANCIS NDERITU | NMG 

The Treasury has moved to toughen the law against counterfeiting by proposing a penalty of a minimum of Sh5 million.

The penalty will be applicable regardless of the value of the goods found to have been counterfeited, dealing a blow to a practice that is seen as negatively impacting manufacturing sector including through loss of formal jobs.

The Excise Duty Act 2015 had previously not set a minimum fine, only saying the penalty would be double the excise duty payable for goods found to have been produced or imported without a licence or for which excise stamps had not been affixed.

“A person who undertakes an activity … [the manufacture of excisable goods in Kenya, the importation into Kenya of excisable goods] without being licensed to do so shall be liable to a penalty equal to double the excise duty that would have been payable if the person were licensed or five million shillings, whichever is higher,” the Finance Bill reads.

Further the law is to be amended to read that “[the culprit] shall be liable to a penalty equal to double the amount of excise duty payable or five million shillings, whichever is higher, in respect of the importation of excisable goods requiring an excise stamp…”

The number of goods covered in the Act has been expanded from the original list under sin taxes to include consumer goods such as petroleum products and bottled water.

The penalties are likely to give considerable relief to such industries such as cigarette and alcohol that have been facing counterfeiting.

The alcoholic drinks industry is one of the worst hit by the counterfeit liquor, especially for the high-end market. The products enter the country disguised as foreign brands.

Other counterfeiters process substandard spirits and distribute them after affixing them with fake excise stamps, thereby undercutting genuine manufacturers.

The Kenya Revenue Authority recently announced that it was also targeting amendments to the Alcoholic Drinks Control Act with a view to seeing tighter controls over the operations of distributors of the beverages in the wake of rising concerns of sale of illicit liquor.

Cables manufacturers have also chalked up billions in losses with East African Cables the main loser.

advertisement