ILLEGAL SEIZURES

KRA fights illicit products and counterfeits for better revenue

In Summary

• The team has been on an overdrive to ensure an economy free of counterfeits and illicit products since May 2018, following a presidential directive.

• The task force continues to conduct operations in different parts of the country with a view of curbing contrabands, counterfeits and illicit goods.

144 drums of imported Ethanol (in blue) which were nabbed by the KRA which had been misdeclared as 1000 bags of cement at Mombasa Port on July 3, 2019.
144 drums of imported Ethanol (in blue) which were nabbed by the KRA which had been misdeclared as 1000 bags of cement at Mombasa Port on July 3, 2019.
Image: ANDREW KASUKU

The Kenya Revenue Authority is keen on the fight against illicit products from the local market and has worked tirelessly to ensure that revenue loopholes are sealed.

KRA together with the multi-agency team on illicit trade and counterfeits comprising of KEBS, ACA, Public Health and DCI have so far seized goods worth Sh7.5 billion, from a countrywide crackdown.

The goods were seized during a crackdown which began on May 2018, out of which goods worth Sh1.5 Billion have been destroyed.

 

The team has been on an overdrive to ensure an economy free of counterfeits and illicit products since May 2018, following a presidential directive.

The task force continues to conduct operations in different parts of the country with a view of curbing contrabands, counterfeits and illicit goods.

Among the goods seized during the operation include; sugar, rice, cigarettes, liquor cooking oil, stone coated roofing tiles, cables, motor vehicle spare parts, plastic pipes, medicines, sandalwood, electrical household switches/sockets, beauty/cosmetic products textiles, among others.

The goods were seized on various dates by the team after they were found to be counterfeited, sub-standard, concealed/unaccustomed/expired/unfit for human consumption.

The suspects who deal in counterfeits substandard goods and handling of un-customed goods are quite often prosecuted by DCI supported by the multi-agency team depending on the offence committed.

From the countrywide crackdown on illicit trade and counterfeits, over 4,211 people were arrested and 1,581 outlets closed for dealing with illicit alcohol.

Over 272,940 brands of various products worth over Sh600 Million were also seized for contravening various laws.

It emerged from the crackdown that most of the goods seized were counterfeited locally with alcoholic drinks being the most affected.

Others were imported from China majorly electric cables, roofing tiles and educational materials like geometric sets. Cigarettes were also imported from Montenegro through UAE.

 

Of the goods destroyed, KRA made reference and adhered to EACCMA, 2004 and was cleared by the National Environmental Management Agency (NEMA). The EACCMA, 2004, empowers the Commissioner to destroy the counterfeits/contraband/illicit goods in a manner that he deems fit.

KRA has revamped operations and put up systems to ensure success in the fight against illicit products. Through market surveillance, intelligence gathering and border control measures countrywide, KRA has relentlessly fought the vice of illicit products.

KRA enforces Border Control measures to ensure non-entry through the borders of any illicit items such as those prohibited under EACCMA, 2004.

The measures include 100 % verification and scanning of cargo at the ports of entry using Non-Intrusive Scanners and K9 for narcotics.

Increased coordination with the multiagency team on national crackdown is also paying off. KRA is coordinating with the following agencies for optimal results; Kenya Bureau of Standards (Kebs), Anti-Counterfeit Agency (ACA), National Police Service, Immigration Department, Public Health, National Environment Management Authority (NEMA), Office of the President, and the National Intelligence Service.

KRA has also put in tight export and import control measures which include the use of Regional Electronic Cargo Tracking System on export and transit goods.

Additionally, exports of neutral spirit are restricted to registered regional importers as a control measure. Importation of excisable goods is restricted to licensed local manufactures and registered importers.

The Excisable Goods Management System is also in use to monitor production and track illicit products in the market. KRA, in addition, collaborates with Alcoholic Beverages Association of Kenya (ABAK) in gathering intelligence.

The role of KRA in the multi-agency team is to collect tax and ensure that all goods produced locally or imported are compliant with tax regulations.

The work that KRA has so far done in combatting counterfeits and illicit trade, is aligned to the government’s Big Four Agenda pillars, especially the manufacturing pillar, which echoes job creation. KRA in collaboration with the multi-agency team aims to create a fair market for genuine products, hence a level playing field for traders.

In turn, consumers are protected from substandard products, harmful to their health.

KRA envisions an economy free of illicit trade and counterfeits, ensuring a fair market for genuine products, hence sustainable manufacturing sector as well as compliance by manufacturers and traders to set regulations.

A fair market, increases Foreign Direct Investments (FDI), encouraging a thriving economy, hence increasing the revenue flow.

Counterfeits lead to loss of tax revenue and a drop in the level of compliance by the manufacturing industry.

High levels of counterfeiting discourages foreign investors from doing businesses in the country, it further causes unfair competition and suppresses growth in genuine businesses, limiting economic growth.

Statistics by the Anti Counterfeit Authority (ACA) state that an increase in the level of counterfeiting reduces economic growth. Using data from 1975 to 2010, ACA further adds that counterfeits in Kenya, decrease GDP growth on impact, the GDP growth increases in the second year and goes on a steady decrease in the third year.

The downward trend continues up to the fourth year.

The writer is the Ag. Commissioner, Intelligence and Strategic Operations at the Kenya Revenue Authority


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