How car importers evade taxes at Mombasa port: Sometime back, a container landed at the Port of Mombasa from Britain with cargo. Two high-end sport utility vehicles or SUVs, specifically 2014 Range Rover Sports silver in colour, were to begin the final part of their journey on land to their owners – supposedly in Uganda.

But documents accompanying the vehicles showed the cargo as toys, which kids from Ugandan families could inadvertently be waiting for. “It was only by chance that we caught this,” Kenya Revenue Authority (KRA) boss John Njiraini said, explaining that it was not the norm to inspect transit cargo. It (cargo) does not belong to us so we have no business checking what is in it, he went on in a chat with business journalists.

A non-intrusive cargo scan performed on the container using newly upgraded machines had revealed that there were actually one or two toys, household furniture and mattresses that were used to disguise the real cargo whose real value would be anywhere above Sh30 million.

This was not nearly an isolated incident. Thousands of top of the range vehicles are illegally imported into the country every year, under the guise of being transit cargo destined for the landlocked neighbours, according to importers themselves.

“It happens all the time, but we think the problem is within control,” Charles Munyori, the secretary general of the Kenya Auto Bazaar Association (Kaba) said of the illegal entry of used cars into the market.

Until late 2011, Kenya had a single registration regime for cars, motor cycles and agricultural and construction equipment. For fraudsters, it made sense to buy a motor cycle, have it registered and use its registration plates on a vehicle that had been diverted from transit. For about Sh80,000 spent to buy the motorcycle, a Range Rover would, for instance, be deemed as duly registered in Kenya using fake number plates.

“It is highly probable that such plate would be affixed to a Mercedes Benz or another top end car,” Munyori added, citing that such vehicles would often deflect any suspicion while their owners happen to be influential in society.

Savings on taxes for the importer could be over Sh7 million and an equivalent size of hole in the country’s revenues which would be plugged, somehow.

There is no limit to how such deprived motor cycles could be used, including resale as whole or spare parts. Mr Njiraini and his staff are convinced that the identical five-litre engine vehicles netted were actually destined for Kenya and would have been diverted anywhere along the 1000km-long road linking Mombasa and the border crossing points into Uganda.

Had the cars been destined for Uganda, the lie is that the fake cargo declaration could only live until the exit points of either Malaba or more probable, the busier Busia crossing. It is procedural for custom officers to inspect cargo entering the respective country, including opening up the containers to ascertain the quality, quantity and value of the imports.

In the likely case that the cars, which have since been detained, were intended to be diverted into the country, KRA would have lost more than Sh15 million in Import duty, Excise duty, Value Added Taxes and Import Declaration Fees. That container was only one among hundreds or even thousands that leave the coastal town of Mombasa every day destined for Uganda, Rwanda, Burundi and South Sudan.

Unfortunately, and in Njiraini own admission, a significant number could be ending up in Kenya. Importers would in such cases cover their tracks by transporting the seals used to track the containers to the border points, and make fictitious entries that the cargo had actually arrived, cleared and handed over across the border.

The following feature was first published in The Standard.