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KRA owes its suppliers more than Sh9.4 billion

The Kenya Revenue Authority (KRA) has racked up outstanding invoices of Sh9.45 billion, most of which is owed to a Swiss multinational security printer, Sicpa SA, for the supply of excise stamps.

The taxman asked Parliament to allocate Sh4.47 billion to clear the Excisable Assets Management System (EGMS) debt.

KRA awarded Sicpa SA a contract for the supply of excise stamps on a range of consumer products, including soft drinks, bottled water, natural juices, beer, spirits, cosmetics and cigarettes.

The excise contract is a multi-billion shilling deal involving the printing of stamps and the provision of technology to detect fake stamps.

Humphrey Wattanga, Commissioner-General of the KRA, told the National Assembly’s National Planning and Finance Committee that the tax collector owes medical service providers Sh1.22 billion, ICT system licensing and maintenance providers ( 792.5 million shillings) and to providers of scanner rental and maintenance contracts. (796.14 million shillings).

He said the KRA also owes insurance providers Sh173.9 million, landlords (Sh522 million), car leasing companies (Sh183.2 million), public utilities and general suppliers (424.1 million shillings) and the maintenance of electronic seals (Regional Electronic Cargo Tracking System) 867 shillings. .7 million.

“The bills are attributable to delayed disbursements and inadequate funding,” Wattanga stated.

“This has been compounded by a reduction in the allocation of additional funds of Sh3.5 billion from the reported amount of Sh10.7 billion.”

He said Sh7.1 billion of the budget funds allocated for the 2022/23 financial year were not disbursed, including Sh2 billion for EGMS debt.

“The authority has prioritized part of the amount in additional funding for the 2023/24 fiscal year,” Wattanga told lawmakers.

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 to the pending bills.

He told the committee to set KRA funding at two per cent of total revenue collection.

“The Authority has submitted several proposals on the financing of the KRA for consideration in the Finance Bill to fix the financing of the KRA in law (KRA Law) at a minimum rate of 2 percent of the revenue targets “Wattanga said.

“However, the proposal has not been approved despite the justification presented. KRA funding must be adequately enshrined in law to address the perennial challenge of KRA funding.”

Wattanga said the KRA has continued to suffer a significant budget shortfall against a resource requirement of Sh57 billion.

“The initial budget allocation to KRA of Sh24.8 billion was inadequate to support personnel costs and operations throughout the financial year with a projected deficit of Sh12.4 billion,” Wattanga said.

“This goes against the KRA’s ideal requirements presented earlier for funding of Sh57.3 billion. The funding gap was Sh32.5 billion.”

Wattanga said the indicative funding allocation for 2024/25 is grossly inadequate and cannot support the personnel costs and operations of the KRA.

“Therefore, the KRA urgently requires intervention to determine business continuity in the 2024/25 financial year,” he said.

“We request urgent intervention for the KRA allocation to be considered at Sh35 billion as a basis for the original revised financial year 2023/24.”

Wattanga said the KRA allocation should not suffer the 30 per cent budget reduction on the basis of the 2023/24 financial year.

Baringo North MP Joseph Makilap proposed that the KRA budget be set at two per cent of revenue targets.

“We need to give them a budget of two percent of the revenue target. We will then hold them accountable for missed revenue targets,” Makilap said.

Mr Kimani demanded to know why it had taken so long for the KRA to complete six ongoing projects, including the East Africa Regional Transport, Trade and Development Facilitation Project, the Horn of Africa Portal Development Project and the Tax Platform Comprehensive of the KRA.

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