Cargo levy up Sh20m as more queries raised on KRA efficiency

Kenya Maritime Authority Director General George Okong’o. FILE PHOTO | NMG 

By ANTHONY KITIMO
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Summary

• The increase in the revenue means the government has been losing millions of shillings in merchant shipping levy due to lack of transparency and accountability.
• On September 2, KRA re-entered an agreement with KMA in a deal where the taxman will provide agency services anchored on enhanced transparency in collection of the merchant fee.
• In the fresh MoU, KMA was given powers to access KRA systems and scrutinise how much is collected and submitted.

Merchant shipping fee has gone up by Sh20 million shillings barely a month after the Kenya Maritime Authority (KMA) and the Kenya Revenue Authority (KRA) signed a deal in push for transparency in collection of port revenues.

The increase in the revenue means the government has been losing millions of shillings in merchant shipping levy due to lack of transparency and accountability.

On September 2, KRA re-entered an agreement with KMA in a deal where the taxman will provide agency services anchored on enhanced transparency in collection of the merchant fee. In the fresh MoU, KMA was given powers to access KRA systems and scrutinise how much is collected and submitted.

KMA Director General George Okong’o had blamed lack of transparency and under-valuing of export cargo for low merchant levy.

“KMA gets its revenue through fees charged per tonnage on all imported and exported cargo and we had been depending on what was brought to us by KRA after collection,” Mr Okong’o said.

“Though we used to depend on manifest to check on any variance, we have proved there had been some lack of transparency. Since we signed the new MoU which allows us to access KRA systems, revenues have gone up by big margin.”

“We also suspect there had been under value of our major exports especially the titanium which can be a reason of revenue increase.” Speaking to the Parliamentary Investment Committee led by Mvita MP Abdulswamad Nassir, where he was tasked to explain a number of issues flagged by the Auditor General reports, Mr Okong’o said with the new measures in place they anticipate to grow revenue further in the next coming months.

“We are also putting more systems to avoid any revenue leakages,” said the director General.

Mr Nassir said the revelation by KMA on significant change of revenue exposes loopholes in KRA systems.

Recently, the audit revealed that the taxman could not account for some funds lying idle with scanty details on its source.

“What KMA has revealed adds to what the committee found on KRA books where it cannot account for some funds since it acts as revenue collection agent to a number of government parastatals. We can confirm KRA books of accounts are in a mess,” said the committee chairman who was supported by Justus Kizito (MP Shinyalu).

KMA first entered an MoU with KRA in June 2013 when Treasury secretary authorised the latter to provide the agency services concerning monitoring, assessment, certification and collection of the levy. KRA would then remit the fees monthly to KMA.

The levy is for all imported goods destined for local market and export goods that are sea-bound. Under the new MoU, KMA will facilitate KRA officials and agents’ representatives with appropriate instructions to enhance service delivery and notify KRA of any statutory changes affecting the amount of levy to be collected, as well as pay a commission to KRA amounting to 2 percent (exclusive of VAT) of the total fees collected.

KRA is also required to prepare monthly reports on the total levy in a prescribed format, besides collecting and remitting the monthly fees.

The House committee also faulted KMA management for failing to surrender documents of the Sh1.8 billion building in Mombasa that will house its headquarters and the Maritime Technology Cooperation Centre (MTCC) for Africa region.

The committee had earlier raised questions how the tender prices were altered by more than Sh98 million even after contract was awarded.

MPs also sought to know why the contractor was requesting Sh128 million more for ground preparation, amount which was not quoted in the tender documents.

The committee was shocked to find out that the building is about to be completed but ground floors were not yet done.