The Court of Appeal has upheld the 2013 awarding of a contract by the Kenya Revenue Authority (KRA) to SICPA, a Swiss firm, to provide excise stamps in Kenya. This brings to an end a long-running dispute over the procurement process and validity of the contract.
SICPA has welcomed the ruling, stating that it proves due process was followed by KRA when awarding the contract. The ruling overturns a 2018 High Court decision that found the contract award to have been irregular.
KRA, the National Treasury, and SICPA had appealed the 2018 ruling. The three Court of Appeal judges unanimously agreed that procurement regulations and tendering rules were adhered to by KRA and the National Treasury.
Excise Stamp System Crucial for Revenue Collection
The enhanced excise stamp system provided by SICPA, known as the Excisable Goods Management System (EGMS), supports tax collection, fights illicit trade, and protects consumers in Kenya.
By providing secure tax stamps that enhance tractability of excisable goods, SICPA’s system optimizes government revenue from these products. It also deters counterfeit and illicit goods by increasing traceability.
Also Read: Chil Femtech Center launches Africa’s first E-Hygiene Shop
Despite the proven benefits, the contract award had faced criticism over allegedly lacking public participation. However, the courts have now definitively ruled the entire procurement and award process compliant with Kenya’s laws.
Uncertainty Around SICPA’s Current Engagement
Although the contract validity has been established, uncertainty surrounds SICPA’s ongoing engagement with KRA. The initial 5-year contract expired in July 2022, with KRA having advertised for new excise stamp providers earlier this year.
There have also been questions around SICPA’s integrity and performance. A parliamentary committee recently summoned the firm’s directors to explain details related to the number of stamps supplied, contract termination circumstances, and more.
Also Read: Epson highlights sustainable tech’s role in education ahead of COP28
With KRA indicating it would take over the excise stamp system, SICPA’s future role remains unclear despite the court ruling in its favor.
SICPA Demands Payment of Debts, Increased Stamp Taxes
Another contentious issue has been SICPA demanding KRA clear over Ksh 4.5 billion of accumulated debts. This led to Treasury increasing excise stamp fees to avoid shouldering the obligations.
As such, even with legal questions settled, the financial and operational aspects of KRA’s excise system need addressing moving forward. The optimal way forward balancing costs, efficiency and revenue collection has yet to be determined.
Conclusion
The Court of Appeal ruling presents an opportunity to resolve the long-running disputes over SICPA’s engagement. With the contract award’s validity reinforced, focus can shift to optimizing operational efficiency and costs for Kenya’s excise tax system.
Striking the right balance between maximizing government revenue, deterring illicit trade, avoiding prohibitive fees, and applying appropriate technologies will be key going forward. Despite lingering questions, the court ruling resolves concerns over the integrity of KRA’s engagement process with SICPA.
