The Kenya Revenue Authority (KRA) has intercepted a scheme to avoid tax involving a consignment of 21,600 high-end smartphones and other goods, which could have cost the country Ksh16 million in lost taxes.
The consignment was shipped through a cargo plane, which arrived in the country on September 18 and was consigned to a cargo company with customs declarations filed by a different company.
According to the tax Authority, the bust followed an intelligence-led operation which flagged suspicious discrepancies in the documentation of the imported goods.
It was discovered that the consignment was declared as consolidated cargo and included at least 5,000 units of smartphones valued at Ksh6.4 million.
Other goods in the scheme included shoes, clothes, automotive spare parts, household goods and other electronic accessories.
Investigations by KRA further revealed that the declaration of goods was either grossly understated or deliberately misclassified in an attempt to evade paying the correct import duties and taxes.
The misclassification of goods was in direct contravention of Section 203 of the East African Community Customs Management Act (EACCMA), 2004, which outlaws the making of false declarations or fraudulent evasion of duty payments.
As per the act, offenders who are found guilty of such practices are liable to a fine not exceeding Ksh1.3 million (USD10,000) or a term not exceeding three years, or both.
"KRA is actively engaged in unearthing schemes in order to boost tax revenue compliance as well as adherence to tax laws and procedures, hence ensuring fair trade is maintained within the market," KRA said in a statement.
This is the latest major bust by the Authority this month, coming just weeks after goods valued at more than Ksh46 million were seized in two separate multi-agency operations.
The operations were conducted jointly with the Directorate of Criminal Investigations (DCI) and the National Police Service (NPS) and saw the recovery of contraband cigarettes in Kienjaa village in Kirinyaga County.
According to KRA, 95 cartons were recovered containing 254 packs of cigarettes whose total value was estimated to be Ksh29,254,000.
From the operations which were carried out in Kirinyaga and Uasin Gishu counties, the taxman averted a potential tax loss of over Ksh19 million.
In a separate operation, KRA recovered Ksh123 million from a company in a tax fraud scheme involving the irregular clearance of rice containers at a container freight station in Mombasa.
