KRA to begin stamp out of vehicle smuggling

Some 124 owners of top-of-the-range vehicles are required to surrender them to the Kenya Revenue Authority officers in Nairobi on Tuesday morning to verify whether they were genuinely brought into the country.

In a move that is bound to send shockwaves, the taxman wants the owners to bring their cars to Railways Club in Nairobi as it cracks down on an international smuggling syndicate that is bringing into Kenya stolen cars from Europe.

KRA has published a list containing registration numbers of the luxury vehicles it says have outstanding tax issues.

Sources at KRA said the cars include Range Rovers, BMWs, Jaguars, Mercedes Benzes and Toyota Land cruisers.

However, it did not include the names of the owners of the vehicles in the advert.

“We want to protect them because some of them genuinely bought the cars without knowing that they have been illegally brought to the county,” said a KRA official involved in the investigation.

Most of the vehicles bear the registration numbers KCC, KCD and KCE and were registered between January 2014 and now.

The owners are required to take with them original ownership, transfer and importation documents to the commissioner of investigations and enforcement for verification.

The luxury vehicles are synonymous with wealth and are mostly owned by well-heeled businessmen, politicians and youthful businessmen — some known as “tenderpreneurs” for their ability to influence and win lucrative government tenders.

“Wealthy crooks” is how a senior official at KRA, who is privy to the months-long investigation, described some of the vehicle owners.

“It is a shame that society accords them much respect because of the cars they drive, yet they are stealing from the poor,” he said.

By KRA’s computation, the cars are worth nearly Sh500 million in taxes and penalties.

VEHICLE RACKET
Criminal gangs are increasingly targeting high-value vehicles — largely 4 by 4s — with keyless security systems.

Depending on the make, version and the year of manufacture, a new Range Rover can sell for up to Sh30 million.

KRA officials said that the average tax for such a vehicle is about Sh8.5 million.

This means someone who successfully brings in two such cars will have made a profit of about Sh15 million at a go. 

KRA Commissioner-General John Njiraini said that they suspected that the mushrooming of car bazaars in Nairobi was a contributing factor to trade in the illegal importation of stolen vehicles.

“We suspect the racket to be partly fuelled by the unchecked growth of ‘car bazaars’, which from intelligence sources, are becoming tax evasion outfits,” he said in a letter addressed to the Director- General of the National Transport Safety Authority Francis Meja.

He suggested that further registration of car bazaars be stopped and random checks be mounted “targeting high range motor vehicles especially Range Rovers and Toyota Land cruisers V8,” read the letter dated December 2, 2015.

The crack down comes after The Economist, a respected magazine, recently published an article that indicated Kenya is becoming a major conduit and destination for stolen top-of-the-range vehicles from the United Kingdom.

According to the magazine, 79,000 cars stolen in the UK in 2015 found their way to East Africa through the ports of Mombasa, Boma in Congo and Dar es Salaam in Tanzania.

The final destination was Kenya, Uganda, South Sudan and the Gulf countries, mainly Oman.

In February last year, police officers in England netted containers at Felixstowe port and impounded five stolen Range Rovers and spare parts that were destined for Kenya.

THE PROCEDURE

KRA began investigations into the theft syndicate in December last year after customs officials at the port of Mombasa impounded three Range Rovers worth Sh28 million in a container that had been declared as containing household goods.

“We basically made a list of all the top-of-the-range cars in the country and started checking one by one whether they were properly registered. The list they have produced is the result of that work,” said a member of the investigative team.

In March, two Range Rovers and a Mercedes Benz were discovered by KRA officials hidden in a container of used mattresses.

The cars were worth Sh28 million and had a tax value of Sh8.4 million, according to KRA. In both cases, the cars had originated from the UK.

If found to have been stolen, the cars are expected to be returned to their owners abroad.

However, if they were genuinely bought, the owners will be required to pay the due tax plus penalties and register the car properly.

Investigators said that one common way the crooks use to bring in the cars illegally is by declaring them as transit cargo to Uganda.

“When we relaxed the process of verification of transit cargo to speed up the clearing process at the port, these crooks took advantage of this opportunity. They knew customs officials would not stringently check the cargo in transit,” said an investigator who did not wish to be named in this article.

He added: “We found that some of the genuine importers in Uganda were not aware that their companies are being used to bring in these cars.”

Once the cargo departs the port, it can either be opened within Kenya and the vehicles sold locally or they are taken to Uganda but are not registered there.

They eventually find their way back to Kenya where fake documents are made for them.

CLOSE MONITORING

He said some of the buyers of these cars are genuinely innocent, perhaps only guilty of not conducting proper due diligence before purchasing their treasured leviathans.

He said KRA will start paying close attention to tax reports of individuals found with illegally registered top range vehicles.

“The owners of these cars are obviously people of means and, if they can evade a car tax, then we want to find out if they have been paying taxes on the businesses they run,” he said.

Mr Meja said they are working closely with local and international police to break the theft racket.

He urged would-be buyers of luxury cars to conduct due diligence with KRA and NTSA and to seek original import documents. He discouraged use of clearing agents.