Smuggled cigarettes threaten to smoke out local manufacturers

Cigarette smuggling into Kenya is on the upsurge, exposing local manufacturers to unfair competition and denying the government a huge source of revenue.

This year the Kenya Revenue Authority (KRA) has seized three consignments of cigarettes concealed in containers declared to be carrying other goods like cotton buds and electronic equipment, raising fears that similar cargo may have passed through the port of Mombasa undetected. 

Two months ago, the taxman intercepted two 40-foot containers packed with cigarettes with a tax liability of more than Sh50 million.

Cigarettes, like alcohol, are subject to high import and excise duty.

This, according to Kenya International Freight and Warehousing Association (Kifwa) chairman Gerald Kagumo is persuasive enough to make unscrupulous importers risk bringing in the product concealed in other goods to avoid paying the levies.  

Cigarettes are slapped with a 25 per cent import duty with the excise fee charged per 1,000 sticks, normally referred to as a mill.

Super high quality cigarettes, equivalent to the Embassy brand, are charged Sh2,500 per mill. A brand like Sportsman would attract excise duty of Sh1,500 per mill.

Supermatch and filterless cigarettes attract excise duties of Sh1,200 and Sh1,800 per mill respectively. 

Last month, the authority seized a 40- foot container with smuggled cigarettes worth Sh41 million at a container freight station in Mombasa. The consignment had been disguised as cotton buds worth only Sh2 million.

According to KRA officials, even if such a container were scanned, the contents would easily pass as cotton buds as the two are likely to have similar images.  

Commissioner of customs Wambui Namu said the cigarettes were purportedly manufactured by British American Tobacco Kenya but were imported from China and had a duty and tax value of Sh32 million. 

Only 104 cartons contained cotton buds, while the bulk of the cargo - 720 cartons - were Sportsman brand cigarettes with fake KRA excise stamps, fake Kenya Bureau of Standards mark of quality and the Ministry of Health warnings similar to those appearing on genuine packs.

According to Ms Namu, the authority relies on an importer’s profile, and in case officials detect an anomaly, a container is supposed to go for a 100 per cent verification to establish its actual content.   

Last week, KRA seized 610 cartons of cigarettes (Richman) a rare brand in Kenya with a tax liability of Sh24 million.

The consignment had been hidden in a container declared to have electronic goods.