15 March 2014

Kenya: KRA to Push for Stiff Fines in War On Fake Products

KENYA Revenue Authority has backed rallying calls by manufacturers to classify counterfeiting of goods as an economic crime through an amendment to Anti-Corruption and Economic Crimes Act 2013.

Manufacturers in brewing and cigarette processing industries, the major victims of illicit trade, said economic loss resulting from the vice amounted to economic sabotage.

The share of illicit brews in alcoholic drinks market, said Kenya Breweries managing director Joe Muganda, hovers between 20 to 30 per cent. Regional manager for anti-illicit trade at giant cigarette maker BAT Juma Mwashuruti said the vice accounted for over 10 per cent of the besieged tobacco market.

BAT, he said, could have paid "much more" in taxes in 2013 if the market was counterfeit-free. "The trade is sabotage to genuine businesses that lose sales revenue and to government that need tax revenue," Mwashuruti said. "It should attract stiffer penalties." Commissioner General John Njiraini said on Friday the taxman will take up the proposals with the National Treasury and Parliament.

"We support the suggestion to include dealing in counterfeit and contraband goods into economic crimes just like tax evasion," Njiraini told a consultative forum on eliminating illicit trade on excisable goods in Nairobi. "This will make them attract enhanced fines."

Dealing in counterfeit attracts a maximum penalty of Sh1.5 million in addition of forfeiture of the impounded goods. Njiraini said the computerised excise stamping system introduced last December for tobacco , wines and spirits industries has helped impound over 100,000 pieces of wines and spirits from over 400 outlets.

The new generation stamps generated by the new digital system, he said, will soon be extended to other industries, beginning with beer and other bottled beverages. "We will commence preparations to roll out similar requirements for other excisable areas," he said.

The stamps generated by the system whose technology was borrowed from Brazil have "highly developed security features" and can be authenticated real time during field visits by KRA officials.

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