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Swiss security printer Sicpa SA has been granted a contract extension to supply excise stamps on a range of consumer products including beer, soda, cosmetics, cigarettes and bottled water as part of a deal to provide the Kenya Revenue Authority (KRA) more time to offset a debt of more than Sh4billion owed to it.
An official document seen by Business Daily showed that Sicpa SA was on August 14, 2024, awarded a deal to supply the taxman with excise stamps for a year. The contract was awarded through a direct procurement arrangement.
Insiders at KRA said Sicpa was granted the contract as part of a deal to allow the taxman to clear an outstanding debt to it.
“It is normal practice to enter such deals whenever debt is involved because it provides the debtor some time to clear up,” a source at KRA said.
KRA Commissioner General Humphrey Wattanga in May told the National Assembly Finance and Planning Committee that the taxman owed Sicpa SA Sh4.47billion and urged for allocation of funds to offset the pending bill.
He said the Sicpa SA debt formed the bulk of the Sh9.45 billion pending bills that the taxman had accumulated.
KRA first handed the Excisable Goods Management System (EGMS) contract to Sicpa in 2015.
The EGMS contract for the supply of excise stamps for both alcoholic and non-alcoholic beverages was a minimum of Sh15.9 billion and a maximum of Sh17.1 billion.
The terms of the contract were based on a time factor subject to the achievement of 12,876,633,889 stamps of the contract period of five years whichever came first. The contract for the EGMS expired in July 2022 but KRA was forced to stick with the Swiss firm pending the clearance of the debt.
Under the contract, Sicpa prints and supplies excise stamps complete with a track and trace system. It also includes the delivery of an integrated production accounting system.
Kenya started to affix excise stamps on excisable goods in 2003 to track the goods across the value chain and seal revenue leakages.
The first phase of the excise stamps regime saw the stamps affixed on tobacco.
In 2007, the government expanded the scope of the stamps to include wines and spirits. In 2012, KRA introduced the track and trace system through the EGMS. This initially covered only tobacco, wines, and spirits.
At the factory level, EGMS enables KRA to tally and tag all products with a unique electronic code that enables subsequent tracking of the product in the market.
Apart from the Sicpa debt, Mr Wattanga told MPs in May that the taxman owed medical service providers Sh1.22 billion, ICT system licences and maintainers providers (Sh782.5 million), and scanner leasing and maintenance contract providers (Sh796.14million).
The official also revealed that KRA owed insurance providers Sh173.9million, landlords (Sh522million), car leasing firms (Sh183.2million), utilities and general suppliers (Sh424.1million), and electronic seals maintenance of the regional cargo tracking system Sh867.7mllion.
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