KRA nabs three Range Rovers disguised as household items

Three new Range Rovers have been nabbed at the Port of Mombasa disguised as household items less than two weeks after The Standard first reported how fraudsters are using this strategy to evade taxes.

The Kenya Revenue Authority (KRA) yesterday said more than Sh19 million in import taxes was nearly lost in the fraudulent importation of the three top-end cars, with the interception raising serious concerns about the legitimacy of thousands of top-end vehicles’ registration.

Last month, The Standard reported how two similar vehicles believed to have been destined for Kenya, but cleared as transit cargo meant for Uganda, were intercepted by KRA.

INTERCEPTED CARGO

Julius Musyoki, the commissioner for customs at KRA, said the latest catch was worth Sh28 million, but had been declared as baby seats, toys, beds and women’s belts.

“As declared, the items would have attracted less than Sh1 million in custom duty and related tax, effectively denying the Authority more than Sh19 million in customs duty chargeable for such top-of-the-range vehicles,” he said.

Mr Musyoki was speaking on the day a revised Excise Duty Act came into force, pushing the prices of basic commodities, such as water, soda and juices, up by up to 50 per cent.

Other items in the two containers, according to the importation documents, were handbags, beach beds and party decoration goods.

The two catches in as many weeks reveals of the scale of tax evasion, especially by the wealthy in society and at the expense of the poor. The latter group mostly contributes to revenue collection through consumption taxes, such as value added tax.

“This interception is as a result of stricter checks and clearance procedures for all import and export cargo passing through our port, as KRA seeks to seal all revenue leakage loopholes,” Musyoki said.

UNSCRUPULOUS IMPORTERS

An investigation has begun to ascertain the owners of the cargo, according to the KRA boss, who also indicated the vehicles might have been stolen from the United Kingdom.

The agency said it was working with the International Police, Interpol, to unravel the criminal syndicate that is responsible for car thefts in the UK and subsequent dumping in Kenya without taxes.

KRA will not release the vehicles, meaning that the owners, who will now be charged with tax evasion, will have to forfeit them.

Unscrupulous importers have had a field day at the port by declaring goods were destined for Uganda, and were in essence out of bounds for the KRA. John Njiraini, the Commissioner General of the revenue collection agency, told reporters that transit cargo imported through Mombasa but destined for other landlocked countries in the region could not be inspected by its officials.

That loophole meant that a Kenyan importer could buy goods using a proxy in Uganda or another country, and then divert it back into Kenya once it had left Mombasa.

A lack of co-ordination with revenue collection agencies in neighbouring countries provided the grey area that importers exploited.

It is thought that such schemes are partly responsible for the revenue collection shortfalls reported by KRA, amid piling pressure on available resources to fund Government operations.

This year has specifically been a tough one for the taxman, considering the record targets set by its parent ministry, the National Treasury. Huge spending on infrastructure projects means every single shilling that can be recovered from taxation could go a long way.

But tax leakages stemming from crimes such as cargo diversion have ensured a revenue collection shortfall of Sh11.4 billion in the customs department in the year to October.

It is such shortfalls that have pushed the State to enact punitive taxation on consumption, such as the Excise Duty Act.

This new law has increased the prices of cigarettes by more than half, as each stick is now taxed at a uniform rate of Sh2.50, up from a maximum of 35 per cent of the retail prices. Low-end cigarettes were most affected in the revised taxation measures.