The Kenya Revenue Authority (KRA) has accumulated pending bills of Sh9.45 billion, with the bulk owed to a Swiss multinational security printer, Sicpa SA, for the supply of excise duty stamps.
The taxman asked Parliament to allocate Sh4.47 billion towards clearing the Excisable Goods Management System (EGMS) debt.
KRA awarded Sicpa SA a contract for the supply of excisable stamps on a range of consumer products, including soda, bottled water, fresh juice, beer, spirits, cosmetics and cigarettes.
The excise contract is a multibillion-shilling deal, involving the printing of stamps and provision of technology to detect fake stamps.
Humphrey Wattanga, the KRA Commissioner-General, told the National Assembly Committee on Finance and National Planning that the taxman owes medical service providers Sh1.22 billion, ICT system licences and maintenance providers (Sh792.5 million) and scanner leasing and maintenance contract providers (Sh796.14 million).
He said KRA also owes insurance providers Sh173.9 million, landlords (Sh522 million), car leasing firms (Sh183.2 million), utilities and general suppliers (Sh424.1 million) and electronic seals maintenance (Regional Electronic Cargo Tracking System) Sh867.7 million.
“The bills are attributable to the delayed disbursements and inadequate funding,” Mr Wattanga said.
“This has been aggravated by a reduction in the additional funding allocation by Sh3.5 billion from the amount communicated of Sh10.7 billion.”
He said Sh7.1 billion of the allocated budget funds for the fiscal year 2022/23, including Sh2 billion for EGMS debt was not disbursed.
“The authority has prioritised part of the amount in the FY 2023/24 additional funding,” Mr Wattanga told lawmakers.
Mr Wattanga said the Authority has engaged the national Treasury for the full disbursement of funds and the KRA funding challenge to ensure a lasting solution for the pending bills.
He told the committee to peg funding for the KRA at two per cent of the total revenue collection.
“The Authority has severally submitted proposals on KRA funding for consideration in the Finance Bill to fix KRA funding in law (KRA Act) at a minimum rate of 2 percent of revenue targets,” Mr Wattanga said.
“The proposal has however not been approved despite the justification presented. The KRA funding needs to be appropriately entrenched in law to address the perennial KRA funding challenge.”
Mr Wattanga said KRA has continued to suffer a significant budget deficit against a resource requirement of Sh57 billion.
“The initial budget allocation to KRA of Sh24.8 billion was inadequate to support staff costs and operations for the full financial year with a projected deficit of Sh12.4 billion,” Mr Wattanga said.
“This is against the KRA ideal requirements submitted earlier for funding of Sh 57.3 billion. The deficit in funding was Sh32.5 billion.”
Mr Wattanga said the indicative funding allocation for 2024/25 is grossly inadequate and cannot support KRA staff costs and operations.
“KRA therefore urgently requires intervention to ascertain business continuity in the financial year 2024/25,” he said.
“We request for urgent intervention for KRA’s allocation to be considered at Sh35 billion being the base of the original revised financial year 2023/24.”
Mr Wattanga said the KRA allocation should not suffer the 30 percent of budget reduction on the financial year 2023/24 base.
Baringo North MP Joseph Makilap proposed that the KRA budget be pegged at two percent of the revenue targets.
“We need to give them a budget of two per cent of the revenue target. Then we shall hold them to account for missed revenue targets,” Mr Makilap said.
Mr Kimani demanded to know why it had taken so long for the KRA to complete six ongoing projects including the East African Regional Transport, Trade and Development Facilitation Project, the Horn of Africa Gateway Development Project, and the KRA Comprehensive Tax Platform.
