Press Center | Freight Shipping Logistics News
The two-week exercise started on Monday and brings together the Kenya Anti Corruption Commission (Kacc), KRA officials and the police, the tax man’s commissioner in charge of investigations Joseph Nduati said. “We want to understand the weaknesses of the procedures and the processes used in the freight stations to clear the cargo so that we can come up with far reaching measures that will help fix the problems. Some may even involve change of rules and regulations,” he said.
CFSs were started by the Kenya Ports Authority (KPA) in 2007 to create capacity outside the port when it faced a serious threat of the punitive vessel delay surcharge (VDS) from shipping lines due to delays caused by congestion at the container terminal. The shipping line slaps fines of up to $50,000 per day.
Port users have, however, complained that the freight stations have evolved into cargo clearing entities without sufficient regulatory mechanisms, which has led to high cost on shippers, tax evasion and loss of the cargo. KRA has so far licensed 16 freight stations seven of which receive containers directly from shipping lines. The KPA officials say that the seven, with a capacity of over 11,000 twenty foot container (Tues) are currently handling all domestic cargo.
The Kenya International Freight and Warehousing Association (KIFWA) vice chairman Peter Mambembe said the audit was long overdue. He said KRA will now understand all the issues that have been raised in the past by port users that abet tax evasion and loss of cargo.
Mr Mambembe said the biggest problem was the manner in which the cargo is nominated to the CFSs. Shipping lines play a decisive role in deciding which freight stations take the cargo and with little control by KRA, containers can easily be diverted to owners before the duty is paid.
“KRA should take the responsibility of the cargo before it leaves the port to CFSs and should even have monitoring devices to ensure that it is not diverted elsewhere,” he said. To curb this, the taxman now requires all trucks carrying goods under its care to be fitted with an electronic cargo tracking system by April 30 this year.
For the first time this year KRA, through the Attorney-General’s office began prosecuting tax evasion cases through the Anti-Corruption and Economic Crimes Act, 2003 which attracts hefty fines and harsh bail terms. There are now two cases of tax evasion in Mombasa courts and one in Nairobi, said Mr Nduati. KRA has been working with Kacc and the office of the prosecutor to punish tax evasion crimes.
Use of the Anti-Corruption and Economic Crimes Act is more punitive and is likely to deter tax evasion and money laundering, according to Mr Nduati. Some of the tax evasion cases have been done in collusion with the KRA officials and by punishing all perpetrators, it will be easy to understand how the syndicate operates and offer corrective measures, he added.
KRA is already pushing for extra specialised tax offences prosecutors. The act which established Kacc explicitly categorises tax evasion as a criminal act.
Fails to pay
Section 45 (d) specifies: “A person is guilty of an offence if the person fraudulently or otherwise unlawfully fails to pay any taxes or any fees, levies or charges payable to any public body or effects or obtains any exemption, remission, reduction or abatement from payment of any such taxes, fees, levies or charges.”
Fines range from Sh1 million plus restitution of up to double of the loss, while sentences of up to 10 years are applicable. Mr Nduati said that the taxman has been auditing imports through the Port of Mombasa for the past one year and has smashed what it believed to be a tax evasion cartel. KRA was able to investigate 22 containers that managed to move through the supposedly watertight clearance system without paying a cent.
PARASTATAL heads who signed the Mombasa port community charter risk being sacked if their agencies do not deliver on the contents of the new entity. The charter signed between the government and the private sector aims at improving the movement of cargo from the port into hinterland