Today's Headlines
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The Nation (Nairobi)
October 2, 2008
News Article By Patrick Mayoyo
The Kenya Revenue Authority could have lost more than Sh2 billion in revenue as a result of a tax evasion racket at the Mombasa port, a report by the Controller and Auditor-General says.
The report for the 2006-2007 financial year says security bonds for goods destined for neighbouring countries worth more than Sh1.5 billion have not been accounted for.
"According to the Customs and Excise Act Regulation No. 96, evidence should be produced for exportation of transit goods within 21 days from the date of their importation and where no such evidence is produced, the goods are deemed to have been imported for home use and therefore liable for duty," the report adds.
No such evidence
The Auditor-General says that no such evidence has been produced.
"It would therefore appear they were converted into home use without payment of the relevant taxes. Further, the relevant security bonds have not been realised into revenue."
The report also raises queries about customs bonded warehouses, saying that the Government could have lost more than Sh500 million in revenue due to fraudulent activities.
"Examination of records maintained by seven customs bonded warehouses in Mombasa disclosed missing goods worth Sh679.046,383," the report says.
According to a register at Customs House Mombasa, goods with a customs value of Sh679.046,383 were delivered to the warehouses. However, on physical check, the goods were not found.
"No documentary evidence was made available to confirm receipt, removal or issue of the goods.
"It appears they were removed without payment of import duty and VAT of Sh149.773,337 and Sh131.972,806, respectively," the report says.
It also says that nine bonded warehouses, which had goods with a customs value of Sh566.428,551, were closed down without authority.
"As a result, import duty and VAT of Sh88.164,657 and Sh199.782.320, respectively, was not remitted to the Kenya Revenue Authority," the report says.
The report adds that the revenue authority also lost more than Sh56 million to suspected diversion of transit vehicles and other goods into the local market.
