Manufacturers Cry Foul Over Installation of New KRA System

By Virginia Mwangi

Kenya Revenue Authority (KRA) plans to install a new tool on industrial production lines, to monitor the flow of goods due to the excise tax, and that, manufacturers are not comfortable with as it will be exposing their trade secrets.

Manufacturers through the Kenya Association of Manufacturers (KAM) have raised concern over what they termed as exposure to theft of their trade secrets and formulas.

On Wednesday, KAM told Members of Parliament that the requirement of having its members load the Excisable Goods Management System (EGMS) equipment on their production lines exposes their trade formulas to the KRA stuff which could end up with their business rivals.

The new EGMS tool, at contention, is designed in a way that details of each excise stamp appended on a product at the point of manufacturing are captured by the system during printing. The details are then tracked along the supply chain all the way from the production room.

The manufacturers fear their longtime guarded trade secrets could end up with their rivals through the captured data.

“Operationally, the EGMS adds a cost and it makes competitiveness of local manufacturers difficult. Coupling this equipment with our already existing machines is industrial espionage being encouraged,” said a concerned Mucai Kunyiha, KAM vice chair.

Earlier, following the release of the Budget, the Government had announced that as from 1st November 2017, bottled water, juices, soda and other non-alcoholic beverages and cosmetics manufactured or imported into Kenya would be affixed with excise stamp duty.

The revenue authority has continued to insist that charging excise duty on the above goods would generate an additional 3.6 billion shillings more in tax.

The change in the Finance Act will see water manufacturers pay 0.2 shillings on Excisable Goods Management System duty with an additional 0.5 shillings on excise stamp duty.

The authority expects the manufacturer to cater for the expense of loading the EGMS equipment in their plants which the manufacturer said is not right or fair warning it would increase the cost of production which would obviously injure the taxpayers.