Alcohol Manufacturers to Install CCTVs in Fresh Tax Evasion Crackdown, KRA

The Kenya Revenue Authority (KRA) is implementing a new rule that requires alcohol manufacturers to install CCTV cameras in their factories to curb tax evasion.

According to KRA, the move will simplify their bid to monitor the amount of alcohol produced to discover instances of tax evasion and improve income assortment. Brewers will also be required to install a mass custody flow meter and radar to monitor the excessive volume of alcohol produced.

“This year, we have come with a very aggressive way of ensuring all manufacturers of alcohol are fitted with three key gadgets, including a mass custody flow meter, a radar to monitor what is entering into their tanks, and CCTV cameras. All these gadgets will be integrated and ensure they can relay data remotely,” a Kenya Revenue Authority (KRA) domestic tax enforcement official Issac Gachoka said.

The metering machine was initially set in 2011 for spirituous liquors such as whiskey, brandy, and gin but is now set to be introduced to the entire alcoholic beverages industry, including beer.

Regardless of passing the regulation, over 40 alcohol corporations manufacturing spirits are yet to confirm. The delay has been attributed to the high cost of the meters, where two units retail at 8 million shillings.

The technology is expected to complement the Excisable Goods Management System (EGMS) deployed in 2013. The EGMS plays a massive role in tracking stamps on excisable goods along the supply chain.

ALSO READ: Absa Kenya’s Net Profits Jumps 161% to Hit Ksh.10.9 Bn

KRA has been experiencing tax disputes with many companies over the years. The latest case divulged from Keroche Breweries with 322 million shillings tax arrears, which accrued from February 2021, led to the plant’s closure.

Similarly, in 2019 the taxman demanded 8.5billion shillings from two major betting firms -SportPesa and Betin Kenya, where Betin was obliged to pay 5.29 billion shillings tax arrears SportPesa to pay 3.29 billion shillings. This led to the suspension of the business licenses of the two firms.

The two firms sued KRA over the alleged tax arrears adding that they had complied with all tax requirements. Other betting firms whose licenses were revoked include Betway, Betpawa, and Premierebet, to name a few.

Other companies that were charged with tax evasion include Bidco Africa, which was demanded to pay tax arrears amounting to 1.3 billion shillings, Purma Holdings Limited (2.2 billion shillings), Africa Spirits Limited and Wow Beverages Limited (41 billion shillings), Doshi Steel Firm (2.3 billion shillings). Mastermind Tobacco Kenya Limited (517 million shillings) among others.

KRA has encouraged taxpayers with tax and customs disputes to embrace to consider the use of Alternative Dispute Resolution (ADR) to settle those disputes while maintaining relationships rather than other dispute resolution mechanisms such as litigation processes.

The taxman has recorded a 31 percent increase in the number of tax disputes resolved through ADR after solving 319 cases during the first half of this financial year compared to 243 cases resolved during a similar period in the last financial year.

The taxman signaled an improvement in the ordinary tax. The tax rose from 707 billion shillings in the 2011/12 financial year to 1.66 trillion shillings against a target of 1.65 trillion shillings in 2020/21, representing a 136 percent growth despite the covid 19 pandemic.

President Kenyatta urged KRA to collaborate with other agencies within the multi-agency framework to fight illicit trade in the country and ensure that no cent is lost through tax evasion.

Kenya has reported a loss of more than Sh153 billion tax revenue annually to illicit trade, with alcohol products and tobacco among the most illegally sold products.