The office, which advises Members of Parliament on budget planning has backed claims that the country lost Sh62 billion in taxes in a palm oil import deal by Louis Dreyfus Company (LDC) Asia PTA Limited and Louis Dreyfus Company Kenya (LDC) Limited.
In a report submitted to the Finance and National Planning Committee of the National Assembly, the Parliamentary Budget Office (PBO) claimed that there was the false entry of taxes on consignments imported through the Mombasa Port which cost the country money.
“They are reportedly importing refined palm oil products but falsely declaring them as crude to evade higher import duties. This misdeclaration resulted in Sh62.9 billion in lost revenue,” the PBO said.
The PBO’s submission claimed that in 2022 the government lost Sh16.5 billion in revenue from the importation of 233,000 tonnes that were mis-declared as crude palm oil and Sh32.54 billion in 2023 from the shipment of another 387,868 tonnes of the commodity.
The officer further claimed that the government has already lost Sh13.83 billion in revenue in 2024 from the misdeclared taxes on 163,567 tonnes of imported palm oil.
The PBO noted that the cargo was imported as refined palm oil but falsely declared as crude palm oil, effectively reducing the duty obligation due to the government to 10 percent.
“It has been observed that a large-scale tax evasion scheme is taking place at the Mombasa Port involving misdeclaration of refined edible palm oil as crude palm oil,” the PBO document reveals adding; “LDC has been implicated in misdeclaring palm oil shipments for their clients intended for Kenya, Uganda, Tanzania and Rwanda.”
Imported refined edible palm oil is subject to 35 percent import duty while semi-refined palm oil attracts a lower- 10 percent duty.
All imports are liable for a 2.5 percent Import Declaration Fee, 1.5 Railway Development Levy, and 16 percent Value Added Tax.
“These taxes are meant to protect local industries by encouraging the import of crude palm oil, which requires further processing domestically, thereby adding value and generating employment,” the PBO says.
The Finance and National Planning Committee of the National Assembly has summoned several agencies including the Kenya Revenue Authority (KRA) to shed light on the alleged Sh62.9billion tax loss.
Other than KRA, the committee chaired by Molo MP Kuria Kimani has also summoned the National Treasury Kenya Bureau of Standards, the Government Chemist, Intertek, a private laboratory, the Agriculture and Food Authority, and the Kenya Ports Authority.
To get to the bottom of the matter, the committee wants KRA to provide details on the total cargo volume of palm oil imported by LDC Asia PTA through the port of Mombasa from February 23, 2023, and June 26, 2024.
The committee said that details should include the volumes of RBD Palm Stearin, Crude Palm Kernel Oil, Crude Palm Olein, Crude Palm Oil, and Crude Palm Fatty Acid Distillate.
The Committee also wants KRA to provide details regarding the total taxes and fees paid by LDC Asia PTA in the importation of palm oil cargo from February 23, 2023, and June 26, 2024.
