State losing billions in tax evasion scam by alcohol distillers
By Mutuku Mwangangi
The taxman is losing millions in revenue as alcohol distillers continue to use old excise duty stamps despite the Kenya Revenue Authority introducing new generation stamps in January this year.
The new generation stamps were meant to eradicate counterfeit stamps that have been denying the government millions of money in revenue but our investigations have established that the vice is still rampant.
The new generation stamps are brown in colour, but an assortment of spirits and vodka in 250Ml bottles from various distillers in Nairobi, Thika and Nanyuki, which we obtained from various outlets still bore the old excise duty stamps, which are dominantly white in colour.
The brands include Blue Vodka, Sparkler vodka from Mount Kenya Breweries in Nanyuki, Blue Ice Vodka, Best and Flying Horse Vodka manufactured by Patiala Distillers which is located in Nairobi and Trigger and Santa King Ice brands by FRM Breweries in Thika.
The government banned Blue Wave Vodka in 205 Ml but it is still available in the market. Our investigations also revealed that some of the distillers work 24 hours in three shifts where the morning shift uses authentic KRA stamps, but the next two shifts use counterfeit stamps thus denying the government millions in revenue.
The brands do not also bear a batch number as per the procedures of production.
On Monday, police in Nakuru impounded 114 cartons of alcoholic Stem Vodka which were uncustomed.
The raid was carried on a motor vehicle registration number KCX 793A that was offloading suspected counterfeit alcoholic drinks at Phonex Wines and Spirits outlet located at Ahero area within Nakuru North Sub County.
DCI detectives and police officers from Nakuru North rushed to the scene and managed to recover 114 cartons, each carton containing twenty 250ml bottles of the alcoholic spirits and vodka.
KRA officers based in Nakuru were also called in where they verified and confirmed that the recovered 114 cartons of the portable spirit did not bear genuine custom stamps and were unlicensed.
They issued a notice of seizure to the owner of the vehicle and the exhibits and the vehicle were handed over to KRA officers for further action.
Tax evasion in the alcohol industry has existed for years and sometimes with the connivance of authorities, according to a source in the industry.
Companies which do not cooperate with the cartels are often driven out of the market by the unfair competition and police harassment, said the source who did not wish to be named for fear of reprisals by the cartels.
Last year, the Director of Public Prosecutions Noordin Haji said in court papers that the government could have lost over Sh41 billion in a tax evasion case filed against Africa Spirits Company. The case is still pending in court.
