A Senate committee has commenced investigations into how Kenya Ports Authority (KPA) has been issuing tax waivers after it emerged that in the 2023/24 financial year, it issued exemptions amounting to Sh1.4 billion.
The committee on Roads, Transport and Housing led by Kiambu Senator Karungo Thang’wa claimed the waivers have been used as avenues of corruption and thus there is a need to get to the bottom of the matter.
The committee raised concerns the country was losing millions of shillings due to the waivers as it singled out Uganda as one of the biggest beneficiaries of the said exemptions.
Said Thang’wa: “One area KPA has been accused of being used to advance corruption is this waiver issue. There is a need for us to look at this more.”
Companies from Uganda
And added: “Most of these companies as you can see are coming from Uganda and some of the reasons being given, like one of them is that his son was involved in an accident does not make sense. This is an area we need to look at even if it means meeting this son. We need clarity on these areas because we believe that some people would want to make money out of this.”’
Nairobi senator Edwin Sifuna said that KPA’s explanation that it gives waivers based on various reasons such as court orders and ailments by the consignee was not convincing.
Documents tabled before senators showed that out of the 34 companies that were awarded the waivers, ten of them are from Uganda while the rest are from Kenya, Congo, South Sudan, Brazil, DRC, Tanzania and Hongkong.
Senators heard that during the period July 1, 2023 to September 30 2023, KPA issued waivers worth $2,751,834.51 (Sh 352.2 million) to 139 applicants although a total 194 entities had applied to be given the waivers.
Approved applications
Reads the document: “139 applications were approved by the management out of which 105 applications were below the threshold of 2 million per bill of lading were granted waiver equivalent to USD 617, 894. A total of 34 applications were above the threshold of KES 2 Million per bill of lading and were granted a waiver equivalent to USD 2,133, 939.2.”
KPA Managing Director William Ruto although said that waivers are guided by the waiver policy, he confirmed that they granted a total of $11.4 M waivers to a number of companies which are mainly on storage.
Although he said that the waiver only represented two percent of Sh67 billion that they made in the year, he was quick to point out that most of the ports do not make money from storage facilities but on other areas.
He explained that most dry ports do not entertain storage facilities that are over-filled as they are seen as inefficient and thus, they work around to ensure that cargo is cleared once it gets to the port. “As I said Mr chairman, we granted waivers in the 2023/24 amounting to $11.4 million.”
The documents show that in Uganda companies including one going by the name Semanda Aron was granted a storage waiver of $29,274 (Sh3.7 million) and only paid $18,588 (Sh2.37 million) out of $46,470 (Sh5.9 million) for accumulated storage for 531 days because the cargo owner experienced challenges in clearing the cargo form the port due to a serious traffic accident that befell his son.
Other companies in Uganda are Swazi Tea Company Limited that was granted a waiver of $16,500(Sh2.1million) out of the storage charges of $33,000 (Sh4.2 million) that was given to them due to shipping documents withheld by the supplier due to delayed payment for the consignment to port storage.
Somdiam Limited was granted a waiver of $41445 (Sh4.973 million) and thus paid $12,304 (Sh1.57 million) out of the total storage cost of $30,760 (Sh3.93 million) because the consignee experienced delays in obtaining shipping documents to facilitate port clearance.
