Controversy is brewing at the Kenya Revenue Authority (KRA) after reports emerge of a huge discrepancy in the volume of trade as reported by the KRA and the volume reported by the agency’s equivalent in China. This is data from the first 10 months of 2022.

 

There is a mysterious difference of 431.9 billion between the amount reported by the Chinese tax agency and the amount reported by its Kenyan counterpart. This raises questions as to what extent were taxes evaded during the electioneering year.

 

Official figures by KRA placed the figure at 377.5 billion but the General Administration Customs of the People’s Republic of China placed the figure at 809.4 billion, this is more than twice the amount reported by KRA.

 

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).

 

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.

 

This form of tax evasion can also occur when there is import under-invoicing, which would cause fewer payments of VAT and customs duties due to the lower valuation of goods.