Ten million tax stamps valued at Sh600 million have vanished and a massive investigation has been started to establish how they disappeared.
Most of the stamps went missing before they were delivered to the country’s two leading cigarette manufacturers.
The tax stamps were imported from India.
British American Tobacco and Mastermind Tobacco say the missing stamps are in circulation.
In January, the Kenya Revenue Authority delivered tax stamps to BAT Kenya but a box for the Sportsman brand with 340,000 stamps amounting to Sh34 million went missing.
A further six boxes with 2.2 million stamps with serial numbers CN7834001 to 9999998 for the same brand were not delivered to BAT.
Raised the alarm
At Mastermind Tobacco, the tax collector cannot account for an estimated 7.5 million stamps and yet the serial numbers are in the market.
KRA commissioner for investigation and enforcement Joseph Nduati said investigations were started after the two firms raised the alarm.
He said KRA could not accurately value the stamps as they were for various brands which sell at different prices.
Mr Josh Kirimania of Mastermind confirmed that 7.5 million stamps for the Supermatch brand were missing.
“We suspect someone at Times Towers is tampering with the stamps,” he said.
The manufacturers said the stamps could be used in the counterfeit cigarette business, denying them and the government revenue.
The loss of the stamps comes at a time when the tax collector missed its revenue target for the third quarter ending in March by Sh3.7 billion.
The tax man collected Sh123.1 billion in the three months from January, missing its target of Sh126.8 billion.
Overall, in the 2009/10 fiscal year, KRA raked in Sh383.9 billion against a target of Sh389 billion, or Sh5.1 billion below budget.
Economic crisis
The authority attributed the decline to slow growth during the period mainly blamed on prolonged drought and the global economic crisis.
The shortfall leaves the tax collector with a Sh161.3 billion deficit to meet this year’s target of Sh545.2 billion.
Separately, KRA has demanded that Mastermind Tobacco pay more than Sh768 million in taxes, a claim the company is disputing.
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