Europe
John Njiraini
Kenya Revenue Authority
Standard Group SMS
Tax Stamp Forum

Smugglers starve KRA of excise tax

The taxman has blamed a European tobacco smuggling racket for a fall in excise tax revenue.

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The Kenya Revenue Authority (KRA) said the smugglers were behind an influx of cigarettes from European markets, including Montenegro.

Commissioner-General John Njiraini said in Nairobi domestic excise duty collections recorded the worst performance in the first half of the current financial year among all tax classes, declining by nine per cent. Remittances from the main excise sectors declined by 8.4 per cent, attributed largely to drop in volumes – 16 per cent for tobacco, 11.2 per cent for spirits, and 16.3 per cent for beer. Mr Njiraini said the election cycle and the complicated supply chain from Europe hit the taxman’s ability to collect more revenues.

“The tobacco supply chain is very complicated and we saw instances of tobacco from Europe, some from Montenegro, find their way into the market,” he said.

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Njiraini was speaking at the eighth edition of the Tax Stamp Forum. He said KRA planned to recruit more than 300 field officers to improve tax compliance. “Implementation of tax stamps without enforcement hinders the capacity of the system. On this element, we have not moved as fast as we would like to, but we are seeing a strong enforcement capacity,” he said.

The KRA boss said the process had been delayed by the intensive nature of building human capacity and getting the officers technical equipment to allow them to read barcodes. KRA plans to install cameras at clients’ premises connected to a central location and issue hand-held devices with a single view of all data relating to the taxpayer.

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