KRA targets brewers installing CCTVs in new tax avoidance crackdown

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Economy

KRA targets brewers installing CCTVs in new tax avoidance crackdown


Times Tower in Nairobi, headquarters of the Kenya Revenue Authority (KRA). Picture taken Thursday October 15, 2020. PHOTO | DENNIS ONSONGO | NMG

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Summary

  • The mass flow meter will track high volumes of alcoholic beverages produced to maximize the excise tax collected.
  • CCTV cameras will also allow the tax authorities to track what companies are producing, relaying data in real time.
  • The measuring device was originally defined for spirit liquors in 2011 such as whisky, brandy and gin, but is now expected to be introduced across the alcoholic beverage industry.

The tax authorities are set to enforce the installation of flow meters and CCTV cameras in liquor factories, in a bid to curb tax evasion and increase revenue collection.

The mass flow meter will track high volumes of alcoholic beverages produced to maximize the excise tax collected.

CCTV cameras will also allow the tax authorities to track what companies are producing, relaying data in real time.

The measuring device was originally defined for spirit liquors in 2011 such as whiskey, brandy and gin, but is now expected to be introduced across the entire alcoholic beverage industry, including beer, and gradually in other excise goods such as water.

“This year we have found a very aggressive way to ensure that all alcohol manufacturers are equipped with three key gadgets, including a mass flow meter, radar to monitor what goes into their tanks and cameras of video surveillance. All of these gadgets will be integrated and ensure that they can relay data remotely,’ said Isaac Gachoka, a national tax enforcement officer at the Kenya Revenue Authority (KRA).

Meter installation was scheduled to begin in October 2011.

Despite the publication of the law, more than 40 companies manufacturing spirits do not yet comply, due to the high cost of meters. Two units are currently selling for 8 million shillings.

“In due course, the remote process will remove the elements of human interaction and allow technology to manage all activities that will take place in these places.”

The technology is expected to complement the existing Excise Goods Management System (EGMS) which facilitates the tracking of stamps on excise goods throughout the supply chain to substantiate the payment of taxes.

The KRA began ordering manufacturers and importers of excise goods to affix traceable EGMS stamps to their goods in 2013.

Digital stamps were intended to replace paper stamps but are also subject to counterfeiting.

The latest decision comes amid a tussle between the tax authorities and Keroche Breweries, where the company is accused of failing to pay 22.79 billion shillings of various taxes over 16 years.

Kenya is said to lose more than 153 billion shillings in tax revenue a year due to illicit trade, with alcohol and tobacco being among the most illegally traded products.

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