Two Chinese-affiliated companies, Shapo Trading Limited and Yulees Blooms Company, are under scrutiny in Kenya over alleged tax evasion in cigarette imports, estimated at Ksh 400 million.
The Kenya Revenue Authority (KRA) and the Directorate of Criminal Investigations (DCI) have launched investigations, suspecting that these companies imported large volumes of cigarettes without fulfilling mandatory tax obligations.
Reports suggest that the companies bypassed using the Electronic Tax Register (ETR) and neglected to stamp excise duty on cigarette packets, flouting key regulatory requirements.
According to insiders, officials received intelligence on the alleged tax evasion scheme, sparking an intensive probe.
“The teams are currently searching for around 200 cartons reportedly missing from the companies’ warehouses in Nairobi. This is a core part of the investigation,” said a source close to the case.
Initial findings indicate that some of these cartons, approximately 40, may have been smuggled into neighboring countries for sale, further complicating the probe.
Additionally, there are suspicions that certain government officials may have played a role in enabling the smuggling and evasion tactics, potentially undermining the local tobacco industry and the livelihoods of local farmers.
Kenya Revenue Authorities Headquarters. Photo: Citizen TV Kenya Source: Facebook
An official stated, “We’ll know more soon. A team is actively working to uncover the full extent of the involvement.”
Despite requests for comments, both companies, headquartered in Kilimani and along Mombasa Road, declined to respond, with a representative from one firm asserting that they operate lawfully.
The scandal comes amidst KRA’s struggle with revenue collection shortfalls. In October, tax collections fell significantly across multiple streams, including domestic VAT, PAYE, and Excise Duty, highlighting a Ksh 2.9 billion gap largely attributed to reduced imports and economic pressures.
The tax agency also recorded notable decreases in excise duties from bottled water, beer, and tobacco sectors, reflecting broader impacts on Kenya’s fiscal health.
