An importer and a clearing agent face prosecution after the Kenya Revenue Authority (KRA) uncovered Sh56 million in under-declared tax on a consignment of mobile phones imported through the Eldoret International Airport.
KRA investigators found 55,607 basic smartphones in a shipment whose owners had only declared 3,000 gadget for taxation in customs documents. The investigators also discovered 309 undeclared high-end phones, highlighting the difficulty of relying on broad customs benchmarks to assess consolidated cargo, particularly where large quantities of high-value electronics are packed into mixed shipments.
“All the taxes due to be demanded,” KRA officers from Investigations and Enforcement, Business Intelligence and Customs and Border Control units have recommended in a confidential report seen by the Business Daily after determining that the consignment involved both under-declaration and non-declaration of dutiable goods.
“Prosecute or compound upon request, both the importer and the clearing agent,” the KRA team adds in the report, citing Section 219 of the East African Community Customs Management Act.
Under-declaration and non-declaration offences under Section 203(a), (b) and (e) of EACCMA, 2004, attract a maximum penalty of USD 20,000 (about Sh2.59 million) or 50 percent of the dutiable value of the goods involved, whichever is higher, or imprisonment of up to three years.
The law also empowers KRA to compound the offences, which means settling the case administratively out of court.
The phones were part of a much wider consolidated cargo shipment containing electronics and other consumer goods.
The manifest included 800 refurbished laptops, 1,300 MacBooks, 63 tablets, 950 mobile phone screens, 1,510 Meeto phone screens, 10 Starlink units, printers, televisions, routers, network equipment and other goods.
There were also six drones, 380 pairs of ear pods, gaming equipment and assorted cosmetics, clothing and shoes.
The KRA officers have also recommended detention of the drones found in the wider shipment pending production of proof of authority from the Kenya Civil Aviation Authority.
“KRA is actively engaged in unearthing tax evasion schemes in order to boost tax revenue compliance as well as adherence to tax laws and procedures, hence ensuring fair trade is maintained within the market,” Commissioner for Investigations & Enforcement, Mohamed M’maka, wrote in a press statement on Wednesday.
The case comes weeks after President William Ruto directed the tax authority to reduce the minimum customs benchmark for containerised consolidated cargo to Sh2 million, reversing an August increase that had pushed the benchmark for a 40-foot container to Sh3.2 million.
The higher benchmark had triggered protests from small traders, with the President’s September 2 directive restoring the charge to below the Sh2.5 million level that had applied for about six years.
An insider at KRA told Business Daily that the reversal would put pressure on the authority’s revenue projections.
“The directive caught us off-guard, and there will be a lot of reviews to correct the mess from the development. The new rates had already been factored into collection projections, and placing the rates back to levels of more than six years ago will certainly cause setbacks,” the source said.
“Customs is a key mover for our overall numbers, and any variations on such rates reflect on the bigger picture,” the source added.
The Eldoret case, however, involves a separate issue from the general customs benchmark, namely the accuracy of declarations made for individual shipments.
The investigation began on September 11 and 12 after KRA received intelligence that a regional airline cargo flight had arrived at Eldoret International Airport carrying suspected undeclared mobile phones and other high-end electronic goods. That triggered a physical verification of the consolidated cargo.
The probe found that the consignment weighed 49,000 kilogrammes and had been cleared through five customs entries, on which importers had paid Sh24.12 million in taxes.
At the prevailing airport benchmark of Sh440 per kilogramme, the report states, the shipment would have generated an expected Sh21.56 million tax. That meant the taxes paid appeared higher than the benchmark.
Physical inspection, however, revealed a substantial discrepancy in the quantity and type of phones contained in one of the entries.
The entry had declared 3,000 mobile phones valued at $10 (about Sh1,295) each, with Sh2.52 million paid in taxes. Investigators instead found 55,607 ordinary smartphones, resulting in an under-declaration of 52,607 units.
KRA calculated total taxes payable on the smartphones at Sh49.92 million against Sh2.52 million already paid on the declared phones, yielding an additional tax liability of Sh47.39 million, according to the investigation report.
There are also 309 undeclared premium phones, including 38 Samsung Galaxy S26 Ultra units, 24 Galaxy Z Fold 8s, 24 iPhone 17 Pro Max units and 19 Galaxy S25s, among other models, raising the tax bill to Sh56 million.
The assessment includes import duty, excise duty, value-added tax, the Import Declaration Fee and Railway Development Levy.
For the ordinary smartphones, KRA used an estimated free-on-board value of $10 per unit, while the 309 high-end phones were provisionally valued at $150 each.
The authority said the assessment for the premium devices could change following a formal valuation.
“The additional taxes applicable to the high-end mobile phones are provisional estimates, pending valuation guidance from the Customs Valuation & Tariff Unit,” the report says.
