Kenya

KRA unearths tax evasion syndicate by liquor sellers in 3 counties

KRA unearths tax evasion syndicate by liquor sellers in 3 counties

KRA officers check the validity of excise duty stamps on over 2,000 cartons of various alcoholic drinks that were impounded at Nkubu, in Meru County on November 23, 2021. The agency unearthed a tax evasion syndicate involving sellers of various types of liquor in Embu, Tharaka Nithi and Meru counties.

Photo credit: Gitonga Marete | Nation Media Group

The Kenya Revenue Authority (KRA) has unearthed a tax evasion syndicate involving sellers of various types of liquor in Embu, Tharaka Nithi and Meru counties.

Unscrupulous businessmen are using fake KRA excise duty stamps, evading tax amounting to over Sh100 million each month in the region, said Mr Mutembei Nyagah, the agency’s chief investigations manager.

On Tuesday, KRA impounded over 2,000 cartons of assorted alcoholic drinks in Meru which were bearing fake stamps, in which the taxman lost Sh6 million in duty and value added tax (VAT), he said.

Mr Nyagah said investigations revealed that there were about 20 trucks supplying the products in the region each month which they suspect engage in such business, resulting to the loss of the Sh100 million.

According to the officer, the practice is prevalent in the region with a trend where distributors who own shops in major towns in these counties do not stock the products in their outlets. Instead, they hide them in go-downs and residential areas and then move the products to the shops in small quantities.

Behind the scenes investigations

“We have already arrested one person over this incident. There have been investigations behind the scenes and we now have started an operation that will ensure all these people are arrested and this illegal business stamped out because besides the fake stamps, there is also the danger that the products are substandard, putting consumers at risk,” he said.

Officers from the Kenya Bureau of Standards (Kebs) will also be involved in establishing whether the goods were of the required standards, he said.

“KRA is not going to relent on stamping out cartels and traders who do not want to remit tax. We will smoke them out and, already, our efforts are bearing fruits because in the last quarter, revenues from excise duty have risen, boosted by these operations that we are carrying out countrywide,” Mr Nyagah added.

Due to the high excise duty and VAT levied on alcoholic drinks, traders get away with huge sums of money by evading the tax.

He said detectives are trying to establish who was involved in the making of the fake stamps that could have been supplied by other cartels other than the manufacturers of the products.

Recently, KRA’s Northern Region Coordinator Nicholas Kinoti noted that trade in substandard goods and tax evasion in the region — especially alcoholic drinks — was prevalent, saying the authority in collaboration with other agencies had devised ways of dealing with the cartels involved in the illegal trade.