Detectives have unearthed a Sh3 billion tax evasion scheme at the Kilindini Port involving the export of hides and skins.

Yesterday, an enforcement team from the Kenya Revenue Authority (KRA) and a team drawn from several government multi-agencies arrested three suspects in connection with the seizure of 43 containers at the Mombasa port loaded with raw hides and skins worth approximately Sh112 million.

Regional Coordinator, Southern Region Joseph Tonui said the government could have lost approximately Sh75 million in export duty, should the culprits have succeeded in their mission to sneak the cargo out of the port for export.

“I want to confirm here that some arrests have been made. Actually three, some of them are the owners, clearance agents and one broker… in terms of the assessment on taxes foregone, the estimate is about Sh75 million for the 43 containers,” explained Tonui at the Port of Mombasa.

The exporters of the hides and skins which are believed to be locally sourced had declared in Customs documents that the Containers were loaded with mats which were to be shipped to US and Europe, to circumvent customs regulations, and avoid suspicion they were involved in the illegal exportation of the products.

Investigations by the KRA Investigations and enforcement department, established that the Cargo which was to be shipped by two Vessels MV BOMAR FULGENT and MV COSCO YINKOU were destined to Nigeria instead of the US and Europe as it had been purported in shipping documents.

Export consignment

Tonui said the export consignment was misdeclared as “mats” at the custom entries but after the containers were opened during the verification exercise yesterday, the contents were confirmed to be “raw hides and skins.”

 “In terms of the taxation regime for the raw hides there is an export tax because the government is keen to encourage the local manufacturing sector and therefore we have a lot of tanneries in our country in which our raw hides are supposed to be manufactured to add value.

So fraudsters want to avoid the payment of tax by giving us wrong descriptions to evade the tax,” he said.  –Reuben Mwambingu and Zadock Angira