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Economy

KRA to block tax cheats from imports

John Njiraini
KRA commissioner -general John Njiraini. FILE PHOTO | NMG 

Individuals and firms that fail to file domestic tax returns may be locked out of import and export business from April, the taxman has said in a fresh bid to boost compliance.

The Kenya Revenue Authority (KRA) says the Integrated Customs Management System (iCMS), to be fully rolled out by March after more than a year’s delay will be connected to electronic tax-filing, iTax, making it possible to flag tax cheats.

“The customs system will have capabilities to share data with iTax so that importers who are not compliant in terms of filing their domestic taxes returns are not able to make their customs declarations,” Commissioner-General John Njiraini said.

Inability to file customs declaration effectively bars one from importing or exporting goods.

The Kenya Association of Manufacturers (KAM), which has in the past singled out the Port of Mombasa for facilitating smuggling of goods into the country, has welcomed the implementation of the new customs management system.

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Increase compliance

KAM chief executive Phyllis Wakiaga said the iCMS linkage with other platforms used by taxpayers will increase compliance, lessening the tax burden on businesses largely operating in the formal sector.

“If this system can increase the taxation base and eventually a decision is made to decrease taxation rate such as corporate tax from 30 percent to say 22 percent (Africa average corporate tax) and VAT from 16 percent to a lower rate, we will further improve the competitiveness of manufacturers goods and encourage more investors,” Ms Wakiaga said through email.

The customs management system, being implemented in phases, has already been out for air cargo operations and management of air passenger declarations.

Rollout for marine cargo operations, specifically at the port of Mombasa which handles about 90 percent of Kenya’s international trade volumes, will mark its final phase, bringing to a close the process which started with tendering in January 2014.

Final phase

“We are kind of one year late. There were challenges in terms of developer being not able to cope with the speed that we had required, but we have addressed that and we have achieved a lot since we took new steps from August,” Mr Njiraini, whose contract expires early March after a year’s extension, said.

“We expect by March, we will have fully rolled out everything including the marine cargo which is the bigger part.”

The iCMS, which will fully replace the 13-year old Simba system, also has capability to detect and block clearance for consignments whose declarations fall outside the limits of in-built values based on prices of various goods from various markets around the world.

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