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A Swiss company could have pocketed up to Sh81 billion if a contract signed with Kenya Revenue Authority (KRA) was to proceed on August 1. In the deal, Swiss firm SICPA Security Solutions was awarded the Excisable Goods Management Systems (EGMS) contract worth Sh17.8 billion on May 9, 2010 for production of a multi-billion shilling duty stamps. ALSO READ: KRAs Sh3.6 billion excise tax plan scuttled This would have seen Kenyans pay an additional Sh1.50 for every bottle of water, juice or soda. The amount is the price of the duty stamp.
The National Assembly stopped implementation of the contract insisting that the taxman did not seek approval. The first phase of the contract, the track-and-trace system covering tobacco, spirits and wine went live on 1st October 2013. Initially disqualified Stay informed while on the go by subscribing to the Standard Group SMS service. Text the word NEWS to 22840. In 2015, KRA decided to extend duty stamps to soft drinks, juices, bottled water and cosmetics. On the face of it, it would seem like a small amount until you compute the number of excisable products you consume in a day. Oddly, the amount is not part of the payable taxes. Consider that an estimated 30 million bottles of soft beverages are produced daily, according to Kenya Association of Manufacturers Chief Executive officer Ismael Kibet. “This translates to Sh45 million per day and Sh81 billion at the end of the five-year contract,” Cherangany MP Joshua Kutuny told Parliament. ALSO READ: Varsity seeks orders to unfreeze bank accounts In a Legal Notice of 2013, KRA said the amount would be paid by the manufacturers and importers to “defray the cost of the system.” SICPA was single-sourced, kicking off a storm and KRA projected that the stamps supplied by SICPA would yield Sh3.6 billion a year, or Sh18 billion over the contract period. Estimated revenue that the Swiss firm would earn over the five years of the tender is Sh81 billion, much higher than the projected benefits. In essence, had KRA paid for the costs of the system, would be spending more than Sh4 to collect Sh1. The firm initially signed the contract with Kenya in December 2012 at a cost that was later renegotiated and increased. The five-year contract worth 42 million euros (approximately Sh4.8 billion at today’s exchange rate) was originally to provide 3.55 billion stamps a year but this was later increased to 158 million euros (Sh18 billion) for 12.87 billion stamps. National Assembly Speaker Justin Muturi while objecting implementation of the contract said the Legislature should have been involved. ALSO READ: KRA disowns employee accused of illegally acquiring Sh615m wealth “If something that has the force of law is being implemented before passing through this House, then it is null and void,” Muturi ruled on Thursday. He added that the regulations by KRA should have been tabled before the House 7 days after gazettement and adopted or rejected by members. The contract between KRA and the Swiss firm has been dodged by controversy. The track-and-trace system covering tobacco, spirits and wine only went live on 1st October 2013 after the Court of appeal gave the deal a nod. Public Investment Committee (PIC) chair Abdulswamad Nassir had directed that the implementation of the excise be halted until issues that were raised were solved. “There are several issues that need to be looked into. We are of the view that KRA suspends the implementation until we are certain that the deal is above board,” he said. Finance Committee chair and Kipkelion East MP Joseph Limo said members had not approved the deal. Earlier, Public Procurement Oversight Authority Director General Maurice Juma had told PIC then by chaired by Eldas MP Adan Keynan that the Swiss firm was awarded the EGMS contract worth Sh17.8 billion on May 9, 2010, long before the company was registered on May 9, 2013. SICPA was initially disqualified from the tender process because it did not meet the requirements.
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