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KRA Targets Those Companies That Don't Pay Tax With Random Searches

To widen its tax base, Kenya Revenue Authority has unveiled random searches targeting tax cheats across the country.

In a notice published in the dailies on Monday, April 26, Kenya Ports Authority (KPA) noted that containers would be randomly subjected to verification to determine that what is declared to KRA matches what is in the containers. 

Those found to be non-compliant will be hit with penalties and will cater for the costs of the inspection at a cost of between Ksh8,000 and Ksh12,000. 

"Containers that are subjected to verification and found to be non-compliant or is-declared shall be charged full verification fees of Ksh8,000 and Ksh12,000 for 20ft and 40ft containers respectively.

"In addition to this, a penalty fee on misdeclaration as per the prevailing tariff shall be imposed," read the statement in part.

KPA explained that the changes were made following government reforms under ease of doing business geared towards addressing bottlenecks of doing business in the country.

The changes were also aimed at reducing costs to importers and exporters.

"Containers that are subjected to verification and found to be compliant or no penalty by KRA is raised shall not be charged verification fees," explained KPA.

This comes even as the taxman continues to explore ways of raising its revenue amid a widening budget deficit.

In 2020, KRA was allowed to collect Withholding Taxes from shipping lines on container demurrage charges. The Withholding Tax from different shipping lines amounted to over KSh2 billion at the time.

In the suit, the shipping lines wanted the court to make a finding that demurrage charges are not subject to tax in Kenya. 

KRA, on the other hand, held the view that demurrage charges do not form part of freight levied by shipping lines as demurrage could only be accrued after the goods have been cleared through Customs and have entered the country.

Justice Francis Tuiyott of Milimani Court’s Commercial and Admiralty Division ruled in favor of KRA in the judgment of a consolidated tax appeal case filed by seven shipping lines operating in Kenya.

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KPA KRA Kenya Ports Authority Kenya Revenue Authority

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