The Kenya Revenue Authority (KRA) is losing billions of shillings in an extra-complicated tax evasion scheme by its employees and unscrupulous importers.
Trucks show up at compromised border posts and log in the wrong cargo in the Import Declaration Form (IDF). The KRA workers then clear the goods and the channel of lies continues.
On August 17, for instance, a truck trainer registration number drove into the border station from Tanzania and while filling the custom entry documents 2020NMA169997, the importer declared that he was just carrying maize seeds. But upon scanning the truck, it was found to be ferrying liquefied petroleum gas.
According to sources close to KRA, the ‘maize cargo’ came from Zambia.
“Entry No 2020NMA169997 CPC C400 shows the item in the tank. However, the item description in the entry of the exit note provided does not tally with the image. Conclusion is an anomaly,” the inspection case said in part.
In another lie, an IDF generated in Tanzania on August 4 under import declaration number 2020NMA169330, showed a truck was ferrying LPG gas. However, when scanned and searched on other systems, the same IDF number showed it had saw dust.
Other than declaring inconsistently, the quacks have also diverted to using single entry invoices to register multiple entries. An import declaration invoice dated May 20 showed an agent using a single invoice to bring in 2, 200 metric tons of Liquefied Petroleum Gas valued at Sh11.6 million.
A closer check at the consignments transported under that invoice revealed that it had five import declaration forms, each of them having up to 20 further entries. By use of a single invoice, the crooks under-declare the quantity imported, with over 100 trucks, and 2,200 metric tons of gas not registered in the books of accounts.
The schemes are complicated as they involve KRA employees who allow the use of single-entry invoices to aid the miss-declaration, which denies the KRA billion in revenue. An old invoice entry will have up to 25 trucks but as it is alleged can be used to sneak in more than double this number, thriving at border points where KRA has either disrupted surveillance or much-compromised employees.
KRA is also losing billions of shillings through the missing trader tax scheme, where some companies are found as actual importers of various goods, but had under-declared to pay less duty and VAT.
In the last three years, KRA has been struggling to meet its revenue collection obligations but recorded a slight improvement in the 2019/20 financial year, managing Sh1.607 trillion, compared to Sh1.580 trillion in the previous financial year. However, it still missed its initial target by Sh275 billion.