KRA links closure of Joho port firms to tax evasion probe

Saturday January 30 2016

Workers at Auto Ports Container Freight Station (CFS) protest against the move by Kenya Revenue Authority to shut down two port firms owned by Mombasa Governor Hassan Joho's family, in Mombasa, January 28, 2016. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP.

Workers at Auto Ports Container Freight Station (CFS) protest against the move by Kenya Revenue Authority to shut down two port firms owned by Mombasa Governor Hassan Joho's family, in Mombasa, January 28, 2016. PHOTO | LABAN WALLOGA | NATION MEDIA GROUP. 

By BRIAN NGUGI
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The taxman broke his silence on Saturday over the controversy surrounding the closure of two firms owned by Mombasa Governor Hassan Joho’s family, linking the suspension of their licences to investigations touching on possible tax evasion.

Kenya Revenue Authority (KRA) Commissioner-General John Njiraini said in a statement the move is backed by the law, insisting that suspension of licenses for Customs Bonded Facilities “is an action routinely used to enforce compliance with customs requirements.”

“In respect of the recent suspension of operating licenses for two CFSs, namely Autoport and Portside Container Freight Stations, the grounds for the actions taken have been provided in the letters communicating the decision and signed by the Commissioner of Customs & Border Control.

"KRA may not publicly discuss the reasons for the actions taken, as this would contravene the rules prohibiting disclosure of information on matters touching on the tax affairs of any person,” said Mr Njiraini in statement.

The KRA boss, however, added: “We note, however, that recent incidents and investigations in progress, have raised serious concerns over the likely involvement of some CFSs in actions that abet tax evasion.

"Such acts include facilitating the importation of contraband goods including sugar, rice, ethanol and other highly sought after commodities. Commission of such acts, not only undermines tax collection, but in addition frustrates broader national development objectives aimed at promoting Kenyan enterprise.”

SABOTAGING THE ECONOMY

He accused some CFSs of sabotaging the economy by engaging in smuggling rackets of counterfeit goods and tax evasion.

“Facilitating the importation of contraband goods sugar, for instance, directly undermines government objectives to promote consumption of Kenyan grown sugar. Abetting the diversion of transit cargo, directly undermines revenue collection, besides undercutting businesses that adhere to transparent business practices,” he said.

Mr Njiraini vowed that KRA would firmly enforce customs regulations as part of a broader campaign to seal revenue leakages.

“Further actions will be taken in respect of CFS installations found, through the ongoing investigations, to be in breach by engaging in transit diversion, smuggling and other fraudulent practices.

"KRA shall also continue tightening Customs enforcement through staff skills enhancement and the hiring of staff with relevant knowledge in law enforcement,” he said.

The closure of the two firms linked to the Mombasa governor's family has sparked a bitter war of words between the Opposition and the government.

Cord leader Raila Odinga claimed on Friday the closure was driven by politics after Mr Joho refused to support the Jubilee Party during President Uhuru Kenyatta’s recent month-long tour of Mombasa.

Mr Munyori Buku, a senior director of communications at State House, however, questioned Mr Odinga’s criticism, saying the revenue authority had the final say on tax matters.

National Assembly Majority Leader Aden Duale on his part has said all Kenyans were under obligation to pay taxes and that the Kenya Revenue Authority had a job to ensure everyone complied.