Uproar as RRA mounts fight against tax evasion at airport

KIGALI - A new measure to curb tax evasion has been introduced at Kigali International Airport.
Passengers at Kigali International Airport. Many say the new policy is inconveniencing. (File photo)
Passengers at Kigali International Airport. Many say the new policy is inconveniencing. (File photo)

KIGALI - A new measure to curb tax evasion has been introduced at Kigali International Airport, which could see passengers incur costs to recover their luggage at the bonded warehouse (Magerwa).

The move is a brainchild of Rwanda Revenue Authority (RRA) and the Civil Aviation Authority (CAA), although the latter denies involvement.

Now passengers will not be receiving their luggage at the passenger terminal, but at a nearby Magerwa warehouse.

Normally, when luggage or cargo is handled by the warehouse, the owner pays some charges before receiving it. The new policy is already affecting passengers with checked-in luggage.

On Wednesday last week Joseph Kamili arrived at the airport from Nairobi. As has been the norm, he stood besides the conveyer belt waiting for his luggage but this time, in vain.

He became confused and remained stranded as were many other passengers that had arrived with him on the same plane.

An airport attendant told them to find their luggage at the Magerwa warehouse. “This is a new arrangement,” an accountant at Magerwa said.

“All cargo has to pass here to clear customs charges but we also charge any luggage that goes through our warehouse whether they are taxable or not,” the accountant told passengers.

Each luggage is charged Frw5900 regardless of its weight.

That means that if a passenger has five boxes of computers or books, they are charged Frw29, 500.

A passenger reacted in anger: “This is sheer robbery. We pay airport taxes on our air tickets and we are also charged for using Airport Park; why should they charge us this extra money?”

Each passenger is allowed excess of about 30kgs of luggage, but this depends on the airline.

However, CAA Director General Joshua Mbaraga said he has not issued such a directive. “That is news to me,” he said last week.

“I have no idea about that and I can assure that CAA is not involved in that plan,” he added.

When asked how he could not know what is taking place at the airport, Mbaraga said: “Much as we have the oversight of the airport business, it is not our responsibility to level tax.”

He said: “We have no competence to charge people for their cargo and we don’t do courier services.”

The Director General of Magerwa Louis Benimana said it was not a decision made by his institution. “We handle cargo that comes to us but we don’t sort out it out.”
“It is a new directive from the airport authority,” he said.

A messenger from one of the courier companies said: “They told us only bags will be received but to get the rest of the luggage we have to clear with Magerwa.”

But the CAA boss insisted: “I categorically deny that. Whoever did that in the name of our institution is a criminal. Something wrong is happening.”

However, the Commissioner General of Rwanda Revenue Authority Mary Baine confirmed the development. She said the decision was taken after discovering that passengers were evading taxes.

“We are trying to address the problem; we realized passengers order taxable things through courier companies like DHL or FEDEX to avoid taxes,” she said.
Baine said a survey in commercial shops indicated that sampled goods with high value had evaded tax through courier companies.

“We insisted every luggage should go through the cargo terminal and be physically verified to avoid evading tax,” she explained.

However, she noted that if a luggage is not taxable, it should not be charged for handling services.

She denied passenger luggage that are not taxable have paid handling charges. “That situation is difficult because Magerwa has to carry out a physical verification.”

But Benimana told this reporter that every luggage that is sent to Magerwa “has to pay the handling fee whatsoever.”

If Magerwa handles about 1000 accompanied luggage a day which are not supposed to be taxed, it means they collect Frw5, 900,000 or Frw177 million a month and can fetch close to Frw2.2 billion a year to  the disadvantage of passengers.

Cargo and Airport Operations Manager George Rudakubana said the measure has affected the airline business.

“It has to be changed as soon as possible because they are hurting our clients,” he complained.

Rudakubana disclosed that the decision was taken by CAA and RRA’s Customs Department without involving Rwandair, the national carrier which also carries out handling services.

“There was a meeting (which endorsed that decision) but we were not invited,” he said adding, “We are trying to see if they can change it.”

Benimana said he doesn’t know who should be responsible. “I don’t know who to blame,” he said.

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