Kenya is losing millions in revenues due to unscrupulous traders who deliberately price imports and exports wrongly, a new report shows.
The report, released this month, shows that the government potentially lost $907 million in revenue in 2013 due to misinvoicing and illicit financial flows.
“Trade misinvoincing is when imports or exports are misquoted at the port in order to avoid paying custom duties. It can occur when there is import under-invoicing, which would cause fewer VAT taxes and customs duties to be collected due to the lower valuation of goods,” said Abhishek Sharma, a logistics analyst at TradeMark East Africa, a not-for-profit limited company that supports the growth of trade, both regionally and internationally, in East Africa.
It could also be due to import over-invoicing, which leads to a company paying more for a product than the right price, thus leading to lower corporate revenues and income tax.
The report called Kenya: Potential Revenue Losses Associated with Trade Misinvoicing , shows that misinvoicing also happens due to under-invoicing of exports, where the exporting company collects less than expected revenue, resulting in lower income and hence reduced income tax.
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