Saturday, August 3rd 2013, By Cyrus OmbatiAn international motor vehicle inspection company is on the spot for allowing importation of prohibited vehicles.
Jevic has been contracted by the Kenya Bureau of Standards ( KEBS) to conduct pre-shipment inspection to ensure compliance to Kenyan standards.
“It appears they have all along duped Kenyans and the taxman into thinking that they are dealing with duly inspected cars that meet the set requirement,” said a senior KRA officer in Mombasa.
The company conducts the pre-export Roadworthiness Inspection (RWI) of used motor vehicles from Japan and Dubai, destined for use within Kenya.
EACC and KRA have so far seized 29 over-age luxury vehicles at the Port of Mombasa, as it intensifies the search of hundreds of vehicles suspected to have been irregularly shipped into the country.
Revenue loss
Officials said 33 other cars are at the port awaiting clearance amid information that they had their importation documents falsified.
“Our officers are monitoring the cars. Once the claims are launched, we will act,” said EACC’s spokesman Yassin Ayila. Officials said the importation could have led to the loss of hundreds of millions of shillings in revenue.
The law bars Kenyans from importing vehicles whose first year of registration is over eight years. The year of first registration is used to determine the depreciation when computing duty. The depreciation is based on the recommended retail prices of new cars provided by local dealers.
For example, a car that is seven to eight years old will be depreciated by 70 per cent, one that is six to seven years by 60 per cent, while one that is five to six years will be depreciated by 50 per cent.
That means the detained cars evaded paying tax. Those caught will attract a penalty of 15 per cent of their value.
A Certificate of Compliance ( CoC) is issued and makes up the documents that must be presented to KRA on importation.
The inspection by Jevic was initiated by KEBS
to minimise the risk of unsafe and substandard vehicles entering the
Kenyan market, thus ensuring health, safety and environmental protection
for Kenyans.
All used vehicles must meet the KEBS
requirement. They must be less than eight years of age, be right-hand
drive, pass a safety and mechanical inspection and its odometer reading
must be consistent with the documented mileage. Jevic charges a Sh14,447
fee per vehicle inspected.Yesterday, EACC officials said they had detained the cars and were probing the importers. EACC vice-chair Irene Keino said they had set up a team to investigate the scam.
Officials said the seizure was prompted by a tip-off by insiders at the port, who wrote to the EACC and KRA over two over-age vehicles that had been cleared after importers falsified their age.
Irene Keino said they had set up a team to investigate the scam.
Tax evasion
Officials Cases of tax evasion are rampant and officials say they are a result of collusion between dealers and government officials.
According to KRA officials, the first assumption was that the importer was falsifying both the CoC and the export certificate.
“We checked the pre-shipment inspector’s website and confirmed that the importers information tallied with what was issued by the pre-shipment inspector,” says a brief from KRA.
The brief added that this opened up the possibility that the issue was being perpetrated with the complicity of the pre-shipment inspector.
For the importer (usually a car dealer), there is a clear incentive to import over-age vehicles. A simple search of Japanese vehicles will show a drop in price of up to 40 per cent for vehicles over eight years old.
Once they purchase these vehicles, they must show that they comply with the eight-year rule, and once the document shows a vehicle as first registered in 2006, all documents including the bill of lading issued by the shipping line, to the import entry and logbook both issued by KRA, will do so.
“There is a possibility that we may need to go back one or two years to see the full extent of the scam,” concludes the report.
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