How tax evaders smuggle goods into the country

Rwanda Revenue Authority (RRA) recently announced that they were battling rising cases of smuggling among other malpractices with used clothes and alcoholic products being among the most smuggled goods.
Residents buy secondhand clothes in Gahanga market in Kicukiro District. T. Kisambira
Residents buy secondhand clothes in Gahanga market in Kicukiro District. T. Kisambira

Rwanda Revenue Authority (RRA) recently announced that they were battling rising cases of smuggling among other malpractices with used clothes and alcoholic products being among the most smuggled goods.

The smuggling practices are usually with an aim to avoid giving the taxman his dues but have far reaching consequences including entry of sub standard goods into the local market.

The move to increase levies on imported used clothes saw an increase in attempts to smuggle these clothes as a section of traders seek to retain their profit margins.

This is because though the supply has reduced significantly as some business people are abandoning this line of business, the demand remain the same.

For instance, RRA has intercepted about 230 tonnes of used clothes being smuggled into the country.

People with knowledge on logistics and importation of products say that among the major ways smugglers use is import goods and send them to a neighbouring country (mostly DRC and Uganda) then find a way to smuggle back into the country, through porous borders.

A local importer (who did not want to be named) explained that once the goods cross the border into DRC, the RRA officials remove the electronic seal thus enabling them to smuggle back the goods into the country.

To get across the borders easily, the goods are often ‘broken’ down to smaller packages and disguised as personal effects (without declaring them) in attempts to smuggle them across the border.

The smuggling process also often involves enlisting the help of paid people to smuggle the goods across the border, disguising as ordinary travelers.

The importer said that another increasingly popular tactic is undervaluation of imports in the paper work with the help of clearing agents

“If you have a rapport with a clearing agent, they often help you to reduce the prices by giving a value that is lower than that of your imports. This is often common with people importing machinery or electronics,” he explained.

Authorities however say that they are aware of the tactics and have put in place measures to curb them.

Robert Mugabe the deputy Commissioner for Revenue Investigation and Enforcement Department at RRA told The New Times that they have mechanisms to curb the fraudulent practices.

“Some disguise their goods as being in transit to neighbouring countries and try to use various avenues and borders into the country including water,” Mugabe said of the commonly used tactics.

He said that among the mechanisms they have put in place include setting up frameworks to access real time information through the single customs territory.

“Now we have real time information through the single customs territory, that makes it possible to know the original values of goods coming in,” he said.

The agency also now has staff in the port of Mombasa and Dar es Salaam who have access to cargo manifests further reducing chances of fraud.

“Now that we have staff in Mombasa and Dar es Salaam, which we did not have previously puts us in a better place. The original cargo manifests which come in with the ship, we can now access it before the clearing agents and reduce malpractices,” he said.

Mugabe said that on instances of smuggling through borders, they have increased vigilance as well as established relations with local leaders as well as close partnership with security agencies.

He added that increased popularity of new clothes as opposed to used clothes could also serve to reduce demand for the products and consequently the smuggling.

The police also works closely with Rwanda Revenue Authority in the enforcement of tax laws.

Police Spokesperson Commissioner of Police Theo Badege said that the police has a unit which supports RRA in fighting tax evasion in its various ways.

The unit serves in operations and investigations in aspects around tax evasion and other fraudulent practices.

In the last fiscal year(2016/2017), RRA registered fraud involving a value of about Rwf 1.2 billion, while this fiscal year (2017/2018), it stands between Rwf400 million-Rwf500million as of December last year.

editorial@newtimes.co.rw

 

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