Kenya Revenue Authority

Chinese imports valued at Sh431.9 billion for the first 10 months of last year are missing from official data .

Other factors such as time lag or differences in the exchange rate used could also have had an effect in the variation, albeit a negligible one. Kenya is grappling with a problem of trade misinvoicing, whereby imports or exports are misquoted at the port in order to avoid paying custom duties. In 2021, the government gazetted various facilities to be used for deconsolidation and clearance of cargo imported by small-scale traders in what was aimed at addressing the problem of under-declaration and non-declaration. Robert Waruiru, a partner at Ichiban Tax & Business Advisory LLP, said that one of the reasons for the variation could be transhipment, where cargo that had been captured by the Chinese tax agency as coming to Kenya is instead transferred to another ship to be transported to another country. "Such cargo could have been erroneously captured by the countries of origin as goods coming to Kenya and not as goods in transit," the KRA official said, adding that some countries use different codes to identify imports and exports. With this deficit, the KRA might have lost at least Sh66.95 billion in tax revenues from 10 percent import duty, IDF and RDL alone, a figure that could jump to Sh135.95 billion if you increase the import duty to 25 percent, that is charged on finished goods, and 16 percent VAT. But the variance could also lend credence to reports that the huge volumes of cargo disguised as goods in transit end up being dumped in the country en route to various destinations in the region to evade taxes. This huge variation is also likely to bring into question the amount of taxes collected on imports from the world’s second-largest economy, as goods shipped into the country attract a myriad of levies, including import duty, value-added tax (VAT), excise duty, import declaration fees (IDF) and the railway development levy (RDL). The official said the disparity could arise from some of the cargo coming to East African states such as Uganda, South Sudan, Rwanda, Burundi, Tanzania, and the DRC from China passing through the port of Mombasa. However, the General Administration of Customs of the People’s Republic of China (GACC), which is the equivalent of KRA, says on its website that the goods exported from China to Kenya during this period were valued at Sh809.4 billion — more than twice the figure given by the KRA. Official KRA data, as published by the Kenya National Bureau of Statistics (KNBS), placed the value of imports from China at Sh377.5 billion in the review period. Chinese imports valued at Sh431.9 billion for the first 10 months of last year are missing from official data reported by the Kenya Revenue Authority (KRA), raising concerns over the scale of tax evaded in the election year.