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The taxman has confirmed losing revenue in tax evasion schemes involving unscrupulous businesses working with corrupt Kenya Revenue Authority officials.
The taxman has confirmed losing revenue in tax evasion schemes involving unscrupulous businesses working with corrupt Kenya Revenue Authority officials.

This comes a few days after revelations by our sister paper, the Sunday Nation, that KRA was losing an estimated Sh100 million every week in rackets involving unscrupulous importers who bring in items ranging from expensive household goods to vehicle spare parts – all tax free – to Eastleigh, the bustling business centre that has become notorious for illicit trade and huge cash transfers.

“Dealing with tax fraud is major challenge for Kenya Revenue Authority and other tax administrators. For our efforts to succeed, we need support of the public including clearing agents, importers, and media,” said KRA director-general Michael Waweru on Monday when he released the 2008/2009 revenue collection figures.

The Exchequer missed its revenue target by Sh12.3 billion, although compared to 2007/2007 the revenues grew by Sh61.7 billion.

Mr Waweru said KRA has signed a memorandum of understanding with the Kenya International Freight Forwarders and Warehousing Association (KIFWA) to help stem corruption among its members.

Sent home

Over the past year 72 employees had been sent packing in a bid to deal with corruption, Mr Waweru said.

This Thursday, the top KRA management is meeting the Kenya Anti-corruption commission to discuss how the integrity testing programme, which they have been running together, can further assist to curb corruption.

“Our intention is to make sure that all corrupt parties are arrested,” he said.

The Exchequer collected a total of Sh480.6 billion against a target of Sh492.9 billion, representing a revenue growth of Sh61.7 billion or 14.7 per cent over Sh418.9 billion collected in financial year 2007/2008.

Mr Waweru cites the rising inflation, volatile exchange rate and the mixed performance of the Nairobi Stock Exchange as some of the segments hit hard.

“These adverse economic fundamentals were not optimal for achieving the set revenue targets,” Mr Waweru said.

Driven by performance of the petroleum products which recorded a revenue growth 15.4 per cent, the Customs taxes department collected Sh179.4 billion against a target of Sh179.7 per cent.

Mr Waweru said that, despite registering a growth of 13.3 per cent compared to the previous financial year, dry cargo was adversely affected by the waiver of import duty on maize to counter the food shortage in the country.

In the financial year under review a total of Sh6.9 billion was forgone as tax waiver on maize.

Domestic taxes brought in Sh298.8 billion against a target of Sh309.8 billion, registering a performance rate of 96.4 per cent.

Road transport taxes collected Sh2.4 billion against a target of Sh3.3 billion, a performance that Mr Waweru attributes to the high target for the department that was not adjusted to reflect the removal of PSV licenses and classes ‘B’ and ‘C’ TLB licenses during the 2007/2008 budget.

This financial year, KRA targets Sh545.2 billion, of which Sh515.8 is the taxman revenues and the balance of Sh29.6 billion represents the various agency revenues that KRA collects, which represents a growth target of 13.5 per cent of the actual revenue collected in the 2008/2009 financial year.

Mr Waweru said taxpayers should embrace online services meant to enhance efficiency in service delivery and reduce cost of compliance.