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Shipping & Logistics

Scanned cargo set to hit 70pc in new plan to plug tax loopholes

Mr John Njiraini KRA commissioner-general, during a past event. FILE PHOTO | NMG
Mr John Njiraini KRA commissioner-general, during a past event. FILE PHOTO | NMG 

About 70 per cent of cargo imports may in a couple of months be declared on a centralised electronic tax system in a renewed bid to nab tax cheats at major border entry points.

Treasury Principal Secretary Kamau Thugge says the lion’s share of the additional Sh4.3 billion to the taxman in the supplementary budget in April will be invested in enhancing its capacity to scan, carry out surveillance and track goods at the port of entry and those in transit.

The KRA is looking to install more scanners at the Port of Mombasa and major airports to catch tax cheats and cut revenue leaks to unscrupulous traders.

Presently, only about 40 per cent of the imports into the country are scanned through the modern centralised system, the PS said.

“Some of the areas that have been covered is the rollout of customs management system to deal with concealment, under-invoicing and undervaluation of imports,” Dr Thugge said.

“The aim is to increase the percentage of imports that are scanned from 40 per cent to 70 per cent shortly. (We are also targeting) regional electronic tracking system to avoid diversion of goods to Uganda and South Sudan.”

The Scanner Integration Project, which is part of the ongoing rollout of Integrated Customs Management System (iCMS), connects all scanners at ports of entry to the Central Scanner Command and Control Centre at Times Tower, the KRA headquarters.

The installation started last October, helping the customs officials at the command centre to monitor and analyse contents of cargo entering and leaving the country.

About Sh1 billion was invested in the project last year, comprising Sh900 million the Chinese government spent on scanners and a further Sh100 million for their installation.

The project is aimed at clamping down on smuggling of goods into the country and reducing collusion by various actors at border points to defraud the taxman of revenue through corrupt deals.

The KRA earlier in the year attributed the Sh131 million growth in daily non-oil revenue in six months to December compared with the same period in 2016 to increased use of the modern scanners.

“Technology pays, but it doesn’t pay immediately,” KRA commissioner-general John Njiraini said. “In the tax cycle, the investment you make today, you get full benefits in about three years.”

Previously, all scanning processes were done at the port of entry, including image analysis of sensitive cargo customs which is now possible at a command centre at the Times Tower.

The taxman is banking on phased rollout of the iCMS to digitise all customs services, ensuring all cargo clearance is done on a single platform.

Most of the imports are currently being cleared using separate electronic platforms, mainly the upgrades on Simba customs management systems introduced in 2005.

The Kenya Association of Manufacturers (KAM) has singled out the Port of Mombasa and the Eldoret International Airport as notorious in smuggling of goods into the country.

“There are so many illicit, un-customed, under-invoiced and counterfeit goods that enter our porous borders, especially through the Port of Mombasa and the airport of Eldoret,” KAM vice chairperson Sachen Gudka said in an interview. “The lack of enforcement of proper tariffs at our borders is really wanting and that need to be fixed.”

The iCMS, which replaces the 12-year old Simba system, is capable of detecting and blocking clearance for consignments whose declarations fall outside the limits of their values which are in-built in the system.

The values in the system are based on prices of various goods from various markets around the world, KRA said at a past engagement, helping tackle cargo undervaluation.

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