Shipping & Logistics

KRA in race for new cargo scanners, upgrades to seal revenue loopholes

Cargo await clearance at the Mombasa port. The Kenya Revenue Authority banks on new technology to seal revenue leaks due to tax evasion at all ports of entry. PHOTO | FILE
Cargo await clearance at the Mombasa port. The Kenya Revenue Authority banks on new technology to seal revenue leaks due to tax evasion at all ports of entry. PHOTO | FILE 

Cargo scanners in all the main ports of entry are set for upgrade and additional ones installed as the Kenya Revenue Authority (KRA) moved to seal tax leaks amid shortfalls in revenue collection.

The taxman said the existing scanners would be upgraded to provide sharper image quality and boost their speed and detection capabilities.

“You will be required to establish a modernised customs management solution having a centralised supervision system with multi-functionalities to realise centralised status monitoring of scanning operations, auditing onsite operation and data mining of the inspection data generated by the scanners,” John Njiraini, KRA commissioner general, said as he invited firms interested in the project.

The targeted new scanner systems will have an interchange with KRA’s supervision centre and the government’s current customs business system.

“Bidders must deliver the entire project within a period of 18 months from the date of award of contract,” Mr Njiraini further said.

KRA introduced scanners as part of a wider strategy to curb tax cheats who often made false declaration of goods handed for processing.

The agency has scanners at key ports of entry including Kilindini port, Jomo Kenyatta International Airport (JKIA), Moi International Airport, Mombasa, Eldoret International Airport, the Inland Container Depot in Embakasi and a few Container Freight Stations (CFSs).

The taxman is under pressure to improve on its collection. Tax revenues have fallen behind targets in the first three months of the fiscal year that began in July, plunging the Treasury into a cash crisis that has left many government workers without pay and disrupted budget plans.

The KRA collected Sh152.7 billion in the first two months of the financial year, an amount that Treasury secretary Henry Rotich has described as unsatisfactory. Overall, Kenya collected Sh182 billion in total revenues, including domestic borrowing and foreign loans in the two months.

That was way below the Sh210 billion that was collected in the first two months of the previous financial year.

Besides the scanners, KRA said in its recently launched sixth strategic plan for 2015-2018 that it would also push on with the implementation of the electronic cargo tracking system (ECTs) to minimise revenue leaks due to diversion of cargo.

Kenya introduced ECTs in July 2009 as it intensified its purge against dumping of transit goods in the local market.

The country is a key gateway to the region in that the Mombasa port handles imports such as fuel and consumer goods for Uganda, Burundi, Rwanda, South Sudan, Democratic Republic of Congo and Somalia and exports of tea and coffee from the region.

The system was particularly set to monitor movement of goods between Mombasa port and Busia and Malaba border points through which goods enter the landlocked Great Lakes Region.

KRA later brought on board export goods and all others under customs control as it broadened the scope to fight tax evasion.
All importers, exporters, clearing agents and transporters conveying goods under customs control are required to install the ECTs equipment, phasing out tamper-prone seals.

Upon the installation of the ECTS equipment, the then cumbersome practices of customs physical escort were phased out and the annual transit goods licence fees waived.

The implementation of the ECTS was, however, hit by litigation by some transporters who mainly cited increased cost of doing business.

“Implementation of the ECTs was hampered by court cases which led to KRA implementing the programme on a voluntary basis to the transporters,” KRA said in its 2015-2018 corporate plan.

The taxman got a boost early this year when Uganda announced it would extend its ECTs into Kenya as part of strategy to curb theft and diversion of goods destined for its market through the Mombasa port.

The main transit routes to Uganda from the Mombasa port have been mapped for coverage by the Internet-based tracking system.

The tracking system is already active in Uganda where it was launched in May last year. It comprises satellites, a central monitoring centre and special electronic seals fitted on cargo containers and trucks, which give the precise location of goods in real time.

The system triggers an alarm whenever there is diversion from the designated route, an unusually long stopover or when someone attempts to open a container.

Besides curbing theft of cargo, the system also helps to seal loopholes that cause the country losses in revenue through suspected under-declaration of the value of exports.