Members of Parliament (MPs) will open an inquiry to establish how the government lost Sh62 billion in revenue for the last three years in imported refined edible palm oil disguised as crude palm oil.
Importers have been declaring wrong figures in a bid to evade paying taxes.
The edible oil is imported from Malaysia and Indonesia, to serve the East African Community (EAC) countries of Kenya, Uganda, Tanzania and Rwanda.
Documents tabled before parliament last month, showed that the consignment imported by Louis Dreyfus Company (LDC) is mis-declared in two ways.
The Trade and Cooperatives Committee of the National assembly will open the inquiry when the House resumes next month after the current recess.
The consignment is a blending of 60 percent crude palm oil with refined palm oil of 40 percent, which is then declared as crude palm oil.
Instead, the product is imported in refined form but declared as crude palm oil to evade the 35 percent import duty or USD500 charged per ton.
The product also attracts Import Declaration Fee (IDF) at the rate of 2.5 percent, Railway Development Levy of 1.5 percent and Value Added Tax (VAT) 16 percent.
Crude palm oil
According to the documents in parliament, in 2022 the government lost Sh16.5 billion in revenue from the 233,000 metric tonnes that were mis-declared as crude palm oil and Sh32.54 billion in 2023 from the 387,868 metric tonnes wrongly stated.
In 2024 the government has already lost Sh13.83 billion in revenue from the 163,567 metric tonnes imported so far.
“They load both cargos into the same ship tanks using a 40 percent refined oil blend and 60 percent crude oil blend.
This is against the World Customs Organization guidelines as any adulterated cargo cannot be deemed as crude oil palm oil,” the documents read.
“The product at the destination country requires less processing or none at all thus their customers save on processing costs,” the documents read.
LDC has offices in Mombasa and is one of the country’s leading vegetable oils merchandisers with a growing footprint across East Africa.
It’s a major importer of palm oil products for millers and refineries in East Africa and operates one of the largest oil seed storage facilities in the region.
