EAC revenue bodies raise red flag over fraud cases

Revenue collection from the East African Community (EAC) is under threat from increased fraudulent practices, commissioner-generals from the regional bloc have said. The fraudulent practices witnessed across the region differ from country to country. During a meeting of EAC Revenue Authorities Commissioner Generals in Kigali, last week, officials observed that fraudulent practices took various forms and changed depending on the mitigations set up. The two-day meet was attended by Kenya, Uganda, South Sudan, Tanzania and Rwanda. In Tanzania, the common fraudulent practices, according to Mary Maganga, the director for planning, policy and research at Tanzania Revenue Authority, include smuggling of goods into the country with the aim of tax evasion. Uganda also reported that smuggling was the biggest threat to collection of revenue. Kenya Revenue Authority commissioner-general john Njiraini said the most rampant fraudulent practices in his country was mis-declaration of imports as well as concealment of goods and container cargo with the aim of tax evasion. In September, Rwanda Revenue Authority (RRA) reported that it had intercepted attempts by fraudsters to swindle funds using electronic billing machine invoices to claim Value Added Tax inputs on fictitious sales. The intercepted operations by fraudsters would have swindled the revenue body about Rwf6.8 billion. RRA said it was also battling attempts by a section of taxpayers to evade taxes paid by underestimating the values of items on the EBM receipts. Richard Tusabe, the RRA commissioner-general, said that tax fraud was not unique to the region and is always changing depending on control mechanisms put in place. “It is a shared problem across the region. Some of the imports that come through customs come underdeclared, others undeclared. We are trying to consolidate our efforts to check these frauds. We want to own some of the regional initiatives where we can pool resources to be able to mitigate some of the risks together at regional level,” Tusabe, who chaired the meeting, said. He said the revenue authorities from across the bloc have since learnt that national approaches do not yield much to address such challenges and that interventions need not be extensive. “The moment you try to do it at the national level only, the gains are not sustainable. Some of our borders are porous,” he said. He added that they were looking to share more information as well as jointly deploy resources to tackle the vices. “We also realised that if we can improve our cooperation without incurring any extra costs, we can still check fraud,” Tusabe said. The tax commissioners also reported a decline in revenue from import duty in recent months, which could affect their ability to meet their targets in the current fiscal year. Dip in revenue collection However, they are still yet to establish the reasons behind the drop in revenue. Experts attribute the drop in revenue to increased consumption of products from within the region or the global economic slowdown, which has reduced the capacity of importers in the region. Dickson Kateshumbwa, the Uganda Revenue Authority customs commissioner, said the changes could also be as a result of non-dutiable imports in the region. Tusabe said it could be a combination of issues, including the global status of the economy. He said the changes were likely an impact of the global economic challenges that have affected the imports and how much foreign currency is available as well as the appetite of banks to lend to importers. “East Africa is not an island and whatever is happening globally has some effect on the region. We are going to conduct an evidence-based review to determine the cause,” he said. “If it is because of increased local capacity, we should celebrate because it means its creating employment, protecting the local currency and has macro-economic benefits that outweigh the tax benefits that we would get from imports.” editorial@newtimes.co.rw

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EAC revenue bodies raise red flag over fraud cases