Electronic tax stamps printer out to set record straight
SICPA the supplier of the Excisable Goods Management System (EGMS) has come out to defend itself against allegations of corruption in other jurisdictions, high cost of stamps and the technical details of its operations in the country over the last ten years.
The securities printer which won a contract a Kes17 billion contract to install the system estimated to collect billions of shillings, has been accused by opposition MP Opiyo Wandayi for making Kes64 billion based on collections minus the cost of stamps.
In a statement to the press, SICPA denied that it made Kes64 billion profit in five years but said only KRA are allowed to disclose its revenues and profits as it is bound by confidentiality clauses under its contract with the taxman.
The company said the contract price estimated in the billions is not profits since part of the money is used in setting up the technology, servicing and maintaining the systems including the employment of 133 full time staff in Kenya in the operations, support and maintenance of the system.
“Revenue is not profit. The value of the contract should be looked at against the cost of implementation and operation of such a system,” the firm said.
“SICPA bears a significant cost for the design and development of systems adapted to revenue authorities’ requirements; the provision of extensive high-tech industrial equipment to cover all manufacturing sites throughout Kenya; the system implementation within tight project deadlines and the operation, support and maintenance of the system according to a high-performance Service Level Agreement for the duration of the contract,” SICPA said.
SICPA also denied reports that it had been convicted for corruption by Swiss and Brazilian authorities saying they were penalized instead for organizational efficiencies.
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The firms said the Office of the Attorney General of Switzerland (OAG) in May 2023 OAG sanctioned it for failure to take all necessary and reasonable organizational measures to prevent breaches of the law by employees.
The company said it acknowledged the sanctions but disagreed with the decision since the former employees were acquitted but chose not to contest to avoid lengthy litigation and the reputational damage that comes with the eight yearlong suit.
“In Brazil, the individuals whose convictions had required SICPA to execute a leniency agreement in 2021 were acquitted on 8 June 2022. In the other two countries, SICPA was never informed of any offence,” SICPA said.
“The decision not to appeal the OAG sanction stems from the long-lasting uncertainty that has been created by this protracted process,” the company said.
The company also sought to make it clear that systems not just printed stickers and batch numbers but are comprehensive, secure and robust track-and-trace system with key components such as production accounting and control, field inspection, public verification, and business intelligence / data analysis which ensures honest declaration to government of the quantity of taxable goods.
SICPA says Kenyan stamps are better than the ones being compared with Europe which are merely stickers.
“While Kenya enhanced tax stamps bear the latest technological developments, they are priced accordingly. The prices cannot be compared with those in Europe, since labels there are merely paper stamps, and have no serialization numbers, secured databases or audit systems,” SICPA says.
The firm said the proposed excise stamps fees increment of up to 300 percent was a government policy out of its hands and that SICPA does not set the excise tax level (which the stamp price is only a component of) – the Governments through the Revenue Authorities in the markets we operate in, are mandated to set excise prices for each category of products.