The KRA in March announced that the new cargo tracking system would be offered to transporters for free, a move that has sparked the vicious war with firms currently providing the monitoring services at a fee.
The taxman in its response says that the system’s introduction was necessary to reduce dumping and diversion of goods in transit, give the taxman more control over data of cargo being transported.
But the lobby group says the KRA in February assured its members that the new regional system would only be used occasionally for arming sensitive cargo, and even invited it to the launch of the platform.
The firms add that cargo tracking service providers have invested heavily in the business and that the new system risks jobs created by the nine firms.
Kenya’s effort to seal loopholes for dumping and tax leakage have run into legal headwinds after local firms moved to court to block the joint deal with Uganda and Rwanda.
The firms which offer cargo tracking services in Kenya have sued seeking to block the Kenya Revenue Authority (KRA) from implementing its e-tracking system in partnership with the two landlocked neighbours.
The nine firms through the Electronic Cargo Tracking System Providers Association of Kenya claim that the KRA has stabbed them in the back by introducing the Regional Electronic Tracking System (Rects) which is already on a pilot phase in Kenya.
The platform, launched by the KRA in March, allows the real-time tracking of cargo from Mombasa to its final destination. The new system will allow Uganda and Rwanda’s tax collection organs to also monitor the cargo.
The KRA in March announced that the new cargo tracking system would be offered to transporters for free, a move that has sparked the vicious war with firms currently providing the monitoring services at a fee.
The taxman in its response says that the system’s introduction was necessary to reduce dumping and diversion of goods in transit, give the taxman more control over data of cargo being transported and to reduce paperwork while maximising use of technology.
But the lobby group says the KRA in February assured its members that the new regional system would only be used occasionally for arming sensitive cargo, and even invited it to the launch of the platform.
The firms add that cargo tracking service providers have invested heavily in the business and that the new system risks jobs created by the nine firms.
“The ECTS service providers were encouraged by the KRA to invest heavily in the single customs territory regime where they underwent rigorous licensing regimes and have so far jointly invested over Sh5 billion into their businesses and employed over 700 staff members.”
“As a result of the launch, the applicants have received numerous phone calls from transporters who have informed them that they do not intend to renew their contracts. By virtue of the KRA’s misrepresentation, secrecy and deceit, the petitioners are reasonably apprehensive that their businesses will be rendered redundant by the full implementation of the Rects system in turn leading to colossal and unconscionable losses,” lobby chairman Tibbs Vincent Robert says in court filings.
The association has sued the KRA on behalf of SGS Kenya Limited, I Spy Africa Limited, Rivercross Tracking Limited, Automated Logistics Company Limited, Navisat Telematics, Borderless Tracking, Track & Trace Limited, Oak and Gold Limited and Soltic/Technobrain.
The nine firms claim that their investigations have revealed that the new system has several flaws that have seen several other countries, including Tanzania, reject its implementation.
The taxman, however, holds that prior to the coming of the Rects it was not in control of some crucial areas of data management, something that hindered its bid to fully stop cargo diversion. The KRA adds that stopping the implementation of Rects may cause diplomatic tension between Kenya and her neighbours like Uganda that have already adopted the new system. It says that Kenya was already on the spot for several cases of cargo theft while using ECTS services from the nine firms.
Susan Wanjohi, KRA chief manager in charge of projects in the customs and border control department, says in court filings that the taxman has already asked Tanzania to allow Kenya extend use of the Rects platform to the country.
