The production of Kenya's tax stamps for wine and spirits is on hold, after a successful appeal by De La Rue against the Kenya Revenue Authority's (KRA) decision to award the contract to an Indian-based rival.

The tender for the self-adhesive stamps took place last year, and the contract was awarded to Madras Security Printers, who bid KSh 153.4 million (US$2m) versus the incumbent supplier De La Rue's offer of KSh 161m (US$2.13m). The latter promptly challenged the decision, requesting a review by the Public Procurement Administrative Review Board and KRA on the grounds that it contravened the Public Procurement and Disposal Act, 2006, but the request was refused. It then went to the Kenyan High Court, which ruled in its favour on the grounds that the Act had been applied unfairly and issued a temporary order to stop the implementation and signing of the contract between KRA and Madras Security Printers pending the determination of the case.

The KRA appealed against this ruling, but this was quashed by the Court of Appeals which upheld the original ruling, along with the judgment that promotion of local industries and economic development should have been a major factor in the evaluation of the tender. De La Rue has a banknote and security printing subsidiary in Ruaraka, near Nairobi, which employs 300 people and produces Kenya's currency, among other documents.

Kenya introduced tax stamps on cigarettes in 2001. These were extended to wines and spirits from the beginning of in 2007 as a result of the Finance Act of 2006, with fines and/or a prison sentence for companies failing to apply the stamps, or applying counterfeit stamps.
The current issue over tax stamp procurement is one, however, that the government can ill afford, given the problems of cross-border smuggling, re-importation and counterfeiting that are rampant. Kenya has the highest rates of excise duty in the region, and recent sharp increases in these have led to a surge in such problems. According to two of the largest local producers, some KSh 9 billion (US$118m) has been lost to counterfeit alcohol. Meanwhile, industrial-scale production of fake stamps has been found both within the country and in neighbouring Tanzania. As a result some manufacturers, unable to move stocks of legitimate alcohol, are either suspending or shutting down production.