Shipping & Logistics

Clearing agents warn KRA on self cargo declaration

The KRA says the new ICMS will, among other benefits, reduce revenue leakage and fraud. file PHOTO | NMG
The KRA says the new ICMS will, among other benefits, reduce revenue leakage and fraud. file PHOTO | NMG 

Importers will from the first quarter of next year have the option of making customs declarations themselves, saving them fees they pay to clearing agents, the Kenya Revenue Authority has said.

The taxman said the ongoing rollout of Integrated Customs Management System (iCMS) will enable importers to declare contents of their cargo online on their own, a development that may open a new battlefront with the agents.

The KRA is taking the new turn in an effort to tame revenue leakage tied to undervaluation of imports.

Importers are, however, free to continue engaging the services of accredited agents.

“The provision of an automated tariff facility effectively empowers any person to make a customs declaration. This feature means that in the not too distant future, Kenyans will be able to make customs declarations without having to depend on clearing agents,” commissioner-general John Njiraini said.

The ICMS, which replaces the 12-year old Simba system, has capability to detect and block clearance for consignments whose declarations fall outside the limits of their values which are in-built. The values in the system are based on prices of various goods from various markets around the world.

“This feature will substantially address the perennial problem of cargo undervaluation which is a major source of revenue leakage,” the chief taxman said.
Importers will also have to confirm the values declared by the agents.

“This lapse has occasioned fraud opportunities where importers are duped into paying money in excess of what KRA receives. The new feature will prevent such fraud schemes by enabling taxpayers to have a pre-emptive view of declarations before they reach Customs,” Mr Njiraini said.

Being implemented in phases, has been rolled out for air cargo operations and management of air passenger declarations.

Roll-out  for marine cargo operations, specifically at the port of Mombasa which handles about 90 per cent of Kenya’s international trade volumes, is likely to be completed in January, Mr Njiraini said.

Kenya International Warehousing Association (Kifwa), the agents lobby, opposes the move to allow importers to bypass them in making declarations.

Kifwa chairman William Ojonyo said the group is meeting in the first week of January to assess the KRA step, including seeking legal redress.

“You cannot open up the process of declaration to an individual who may not have the capacity to do many other things that will include going to the port and having the consignment verified,” Mr Ojonyo said on phone. “It is unfortunate that they (KRA) didn’t engage the stakeholders to understand the magnitude of effects of opening declaration to the public.”

KRA charges Import Declaration Fee at the rate of 2.5 per cent of the consignment’s cost, insurance and freight value, subject to a minimum fee of Sh5, 000.

The agents denied defrauding clients. “It is KRA that push agents into giving unaccountable money, including bribes, before consignments are released,” Mr Ojonyo said.

Revenue from import duty in the financial year ended June this year rose 13.58 per cent to Sh89.94 billion compared to the previous year. In the four months through October, KRA collected Sh27.60 billion in import duty, Sh1.76 billion more compared to the same period last year.