The Treasury has been thrust into the spotlight as the government moved to implement a radical directive aimed at curbing suspected revenue leaks at the various private cargo container holding facilities. Kenya Ports Authority (KPA) managing director Gichiri Ndua last week said as from December 1 the agency would have the sole mandate of determining which freight containers would be held at the various container freight stations (CFSs) awaiting shipment.
“All shippers, agents and shipping lines are therefore required to comply with this new government directive and ensure that shipping documents, including manifests and bill of ladings, are not endorsed to specific CFSs” he said in a notice. Presently, shipping agents freely choose where to direct their cargo awaiting shipment to the various destinations. “All local import containers must be manifested to the CFS nominated by KPA. KPA will subsequently process the nomination to the appointed gazetted CFS using agreed distribution criteria.”
But yesterday, players from the shipping industry were scheduled for a special meeting with Treasury secretary Henry Rotich amid concerns over the directive. “We have a meeting this afternoon (yesterday) to oppose the guidelines as they go against best practice and maritime regulations,” Gilbert Langat, CEO of Shippers Council of East Africa told the Business Daily ahead of the meeting with Mr Rotich.
According to a work plan by KPA, a total of 12 vessels had to be nominated to six CFSs between yesterday and November 30 when the new system takes effect. The government is currently battling to seal revenue leaks in cargo handling amid claims that some industry players were colluding with importers to dodge duty. As part of a strategy to seal loopholes in cargo handling, the Kenya Revenue Authority (KRA) plans to upgrade cargo scanners in all the main ports of entry and install additional machines.
The taxman said the existing scanners would be upgraded to provide sharper image quality and boost their speed and detection capabilities. “You will be required to establish a modernised customs management solution having a centralised supervision system with multi-functionalities to realise centralised status monitoring of scanning operations, auditing onsite operation and data mining of the inspection data generated by the scanners,” John Njiraini, KRA commissioner general, said as he invited firms interested in the project.
The targeted new scanner systems will have an interchange with KRA’s supervision centre and the government’s current customs business system. The taxman introduced scanners as part of a wider strategy to curb tax cheats who often make false declaration of goods handed for processing. The agency has scanners at key ports of entry including Kilindini port, Jomo Kenyatta International Airport, Moi International Airport in Mombasa, Eldoret International Airport, the Inland Container Depot in Embakasi and a few CFSs.
The taxman is under pressure to improve on its collection. Tax revenues have fallen behind targets in the first three months of the fiscal year that began in July, plunging the Treasury into a cash crisis that has left many government workers without pay and disrupted budget plans.The KRA collected Sh152.7 billion in the first two months of the financial year, an amount that Mr Rotich has described as unsatisfactory.
Overall, Kenya collected Sh182 billion in total revenues, including domestic borrowing and foreign loans in the two months. That was way below the Sh210 billion that was collected in the first two months of the previous financial year. Besides the scanners, KRA said in its recently launched sixth strategic plan for 2015-2018 that it would also push on with the implementation of the electronic cargo tracking system (ECTs) to minimise revenue leaks due to diversion of cargo. Kenya introduced ECTs in July 2009 as it intensified its purge against dumping of transit goods in the local market.
The country is a key gateway to the region. The Mombasa port handles imports such as fuel and consumer goods for Uganda, Burundi, Rwanda, South Sudan, Democratic Republic of Congo and Somalia and exports of tea and coffee from the region. The system was particularly set to monitor movement of goods between Mombasa port and Busia and Malaba border points through which they enter the landlocked Great Lakes region. KRA later brought on board export goods and all others under customs control as it broadened the scope to fight tax evasion.
All importers, exporters, clearing agents and transporters conveying goods under customs control are required to install the ECTs equipment, phasing out tamper-prone seals. Upon the installation of the ECTS equipment, the then cumbersome practices of customs physical escort were phased out and the annual transit goods licence fees waived. The implementation of the ECTS was, however, hit by litigation by some transporters who mainly cited increased cost of doing business.
Source: Business Daily

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