Rwanda Revenue Authority (RRA) has discovered a new trend of smuggling of goods where smugglers use forged documents at the official borders, in order to avoid payment of import duties.
The tax body says that traders present invoices with lower prices at the customs declaration point in order to evade taxes.
According to information from the RRA’s Revenue Protection Department (RPD), traders ship in goods from as far as China, Dubai, and Korea and declare them as goods originating from the East African Community (EAC) using forged documents.
This is done to take advantage of Rwanda’s entry into EAC Customs Union, where goods originating from the Community attract a lower Common External Tariff (CET).
Under the CET, the customs tariff band finished products attract 25percent, intermediate goods 10 percent while raw materials and capital equipment are not charged(o percent).
“Smugglers keep changing posts depending on where we put emphasis. Using forged documents is turning out to be the highest form of smuggling.
It is very difficult to seize such smuggled goods at the border because we have to first verify the presented documents,” Seith Muhirwa, the Director of Protection Department told Business Times in an exclusive interview.
Muhirwa explained that when somebody presents an invoice, according to the provisions of the law you are supposed to accept it unless otherwise.
He said this makes it difficult and costly to capture the smugglers, as verification must be done foremost.
“Goods are brought from as far as China, and they are under declared. We also have information from people who are coming from Dubai where traders says_ _ _, I know you are from a country which is tough on taxes. get an empty invoice to use.
Muhirwa added that this illicit practice is costly and time consuming for RRA to establish the truth, as they require tangible evidence before-hand to disregard the invoice presented because it includes traveling abroad to verify the prices.
Though smuggling has remained a challenge to the tax body, Muhirwa said RRA is working round the clock to track down those involved in the vice that is increasingly unfolding at official borders of Gatuna, Rusoma, Kanyaru and Kagitumba.
“We have a good working relationship with neighboring countries, especially those where these products are coming from.
Quite often we send a team to countries like China, Dubai to verify prices and also update our database,”
In addition, RRA installed an electronic platform, called Raddex, to share information across the East African Community.
“This is helping us to minimize on tax evasion and dumping of goods,” Muhirwa said.
He also revealed that liquors like wines and spirits, Bitengi fabrics are among other products that are often smuggled into the country (using informal channels) from DR Congo, Tanzania while general merchandise originates from Uganda.
The authority has also discovered that assorted body care products, most of which are counterfeits, are smuggled from Congo.
However, Muhirwa says RRA has intensified enforcement measures with regard to smuggling to recover government revenue. This involves intensifying land and lake surveillance as well as monitoring goods under customs control.
RRA recently acquired two speed boats that will facilitate anti-smuggling campaign along Lake Kivu.
The high speed vessels with a radar detection and Global Positioning System (GPS) - satellite navigation system are based in Rubavu District along the Gisenyi-Goma border and at the Rwanda Defence Forces (RDF) Marine base in Kibuye. Both boats are estimated at above Rwf600 million.
Over the years, the treasury has been losing hundreds of millions to racket smugglers who operate along Lake Kivu.
The tax authority monthly records show that cartons of liquor, cigarettes and powdered milk are some of the major smuggled goods.