Kenya Revenue Authority (KRA) has raised a red-flag after a tax-evasion syndicate managed to get away with Ksh2 billion after devising a shrewd trick.
According to a report by Daily Nation, the syndicate reportedly came up with a bypass system that allowed it to distribute goods meant for export locally, hence evading billions in taxes.
The eight companies were accused of deactivating tracking devices placed on the consignments just before border crossing points after receiving a greenlight from the taxman to distribute the goods to Uganda, South Sudan and other landlocked countries that use Kenyan ports for imports, and then proceeded to sell the good locally.
The taxman carried out an exercise in 2019 involving three goods: petroleum products, milk, and alcohol which exposed the level of rot in the export industry that might have cost the institution billions.
Out of the eight companies, six of which provide tracking services, risk their licenses being withdrawn if they do not own up to their malpractices.
“Following reconciliation on transit consignments of milk, petroleum, and alcohol destined to Non-Single Customs Territory (SCT) countries from Mombasa between 2018 and 2019, it has been established that there is no evidence that the seals disarmed by yourselves and conveying the said products were received at the Busia/Malaba border. The consignments’ tax liability is Kh757,649,612.
"You are therefore called upon to account for your actions within seven days and aid in handing over all the listed trucks to ICD Kisumu or have enforcement action taken against you without further reference to yourselves,” readS part of a letter from KRA.
As a result of the revelation, KRA is seeking to detain 1,200 trucks accused of engaging in the malpractice. Over 200 of the tracks were seized in the week beginning Monday, March 23.
Some of the trucks, which are detained in Eldoret and Kisumu, were found with petroleum destined for Uganda, Rwanda, Burundi, South Sudan and parts of the Democratic Republic of Congo.
“The tracking firms charge about ksh 200,000 to register for the services plus an annual fee of about Ksh 40,000.
“When we tried to introduce free tracking of the lorries, there was stiff opposition. Now we can tell just how much they were making after we entrusted third-party firms to monitor the transit cargo,” stated a representative from KRA.
The taxman also pointed out that Luanda in Western Kenya was the most affected town where most of the goods were being dumped.
