Kenya Revenue Authority is mulling a regional customs management platform to curb tax evasion within East African countries. Commissioner General John Njiraini said work had started on a common system to manage taxation of imports would eliminate the loopholes exploited by tax cheats.
Among the inherent weakness commonly abused in the diversion of transit cargo including top-end vehicles destined to the other countries, often with no taxes paid in either Kenya or the intended destination. “The initiative once implemented should have substantial impact in reducing loopholes exploited by unscrupulous traders with intent on evading the payment of their fair share of taxes,” Mr Njiraini said Thursday.
A common system would mean that all imported cargo will be cleared though the same platform by Kenya and the other regional neighbours; Uganda, Tanzania, Rwanda and Burundi. He was speaking during the annual international Customs Day where KRA listed successes drawn from the digitisation of customs operations, including the Integrated Customs Management System that replaces the Simba System later this year.
“This new system (iCMS) will have more enhanced features and assist in areas like faster cargo clearance, secure trade chain, easy access to the Customs’ system across various platforms and reduce the cost of doing business,” added the Commissioner General.
Previous measures implemented by the KRA including the Electronic Cargo Tracking System have only reduced the level of diversion of goods, with several cases of the malpractice often reported. A fragmented customs management among the different countries presents an opportunity for mis-declaration of goods imported to the region through the main port of Mombasa. Recent improvements on scanning of all cargo has discovered the scale of tax cheating, specifically for transit cargo declared in the import documents as goods of a much lesser value.
Conflicted needs to encourage cross-border movement of people and goods, while checking on illegal migration and other security concerns presents the single biggest challenge for the revenue agency – which is also responsible for border management.
“Economic prosperity relies on the free movement of goods and people, but if those flows are not monitored and controlled the result will be smuggling, trafficking and illegal immigration and with these, organised crime and terrorism,” KRA said of the need for credible data of cross-border activity.
Commissioner for Customs and Border Control Julius Musyoki said his department was building a data warehouse which would enable officials to have a single view of taxpayers and their respective risk profiles.
KRA also expects to have over 70 per cent of the cargo coming through the sea port to be cleared before the vessel arrive, as part of wider reforms to enhance faster uptake of goods and ease congestion.