Firms battle KRA for cargo tracking system control

The Kenya Revenue Authority is embroiled in a legal battle with vendors of electronic cargo tracking systems, who have sued the taxman to block its control of the system meant to tame tax evasion.

A petition filed on behalf of the vendors by activist Okiya Omtatah wants the court to stop the authority from taking over management of cargo tracking services, which they have been running since 2006.

The taxman has accused vendors of colluding with cargo owners to dump goods in the local market.

The petition 113 of 2020 before the High Court in Nairobi is the second in the battle to keep the tracking of transit cargo business in the private firms after a similar one in 2017 was dismissed by the same court, with KRA now accusing the vendors of sneaking an appeal on the earlier petition they had lost.

“The honourable court be pleased to issue an interim order suspending the Kenya Revenue Authority implementation of the KRA Regional Electronic Cargo Tracking system (RECTS) through the public notice issued on March 13 and the free use of the customs Electronic Cargo Tracking Seals acquired from BSmart technology Limited,” reads the petition in part.

The vendors argue that the procurement of the system KRA is using in partnership with other East African revenue collection agencies was not competitively bided for and that the shift to the new system will ruin their businesses.

The latest battle in court now prolongs KRA’s long journey to control transit cargo monitoring after a requirement that all goods destined to the Northern Corridor countries of Uganda, Rwanda, Burundi, Southern Sudan and the Democratic Republic of Congo be transported only in trucks fitted with the electronic monitors that meet KRA standards was introduced in 2006.

KRA then issued licences to firms to provide the transporters with the service at a fee of about Sh3,000 per truck and since then, the seven vendors have been deeply entrenched in the business that they are now battling to keep.

A March 2020 notice that all containerised cargo will have to use RECTS prompted the latest court battle, with KRA maintaining that taxpayers will lose billions in shillings should the plan be suspended.

KRA assistant manager for customs and border control Bernard Kibiti told the court in an affidavit responding to the petition that the taxman would be left with no tool to track the transit cargo, which have caused massive tax losses through dumping aided by the private tracking firms.

The private tracking platforms are also said to be prone to data manipulation, hacking and their data does not give KRA a holistic view of the tracking process.