The Kenya Revenue Authority (KRA) and detectives from the Directorate of Criminal Investigations (DCI) have uncovered a major tax evasion syndicate involving liquor sellers and distributors, preventing a loss of over Sh30 million in taxes.
The unscrupulous traders operating across Nakuru, Kiambu and Nairobi counties have been using counterfeit KRA excise duty stamps to smuggle ethanol and illicit liquor into the country, evading taxes that amount to over Sh100 million per month in the region.
Investigations have revealed that the suspected criminals conceal the illicit goods in various ways including smuggling ethanol and fake liquor through alternative routes to avoid detection by authorities.
According to KRA Commissioner for Investigations and Enforcement David Yego, the illegal activities have been rampant in the region with distributors hiding products in warehouses and residential areas, often moving them to retail outlets in small quantities.
“A trend has been noted where most of the dealers hide the products in go-downs. The illicit liquor distilling plants are also operated from private residential premises, especially in posh estates, to avoid detection by law enforcement,” Mr Yego said.
The illegal businesses are tightly connected to the smuggling of ethanol and impact not only distributors but also retailers dealing in second-generation alcoholic beverages.
Detectives said they believe the syndicate smuggles ethanol and illicit liquor into the country from Tanzania, Uganda and other countries.
The commodity Is hidden in shipments of cereals, molasses or other products to bypass customs and police checks.
According to Mr Yego, Nakuru serves as the main route for smugglers with many consignments intercepted between Nakuru and Naivasha.
Smugglers tend to avoid major highways instead opting for routes like Eldama Ravine or Nakuru-Nyahururu.
Due to the high excise duties and VAT imposed on alcohol, manufacturers of illicit liqour profit greatly by evading taxes, especially with the cheap ethanol easily available in the region.
As a result, these illegal activities not only contribute to tax evasion but also have a significant impact on the country’s economy.
In one recent operation, KRA officials together with DCI detectives seized 22,000 liters of suspected ethanol being transported from the Malaba border to Nairobi.
The operation led to the arrest of two suspects attempting to smuggle ethanol worth over Sh10 million.
The ethanol hidden in 88 drums concealed with construction blocks was intercepted by detectives from Nyahururu and KRA officials who acted swiftly based on intelligence.
Investigations have shown that such smuggling operations are common with similar trucks transporting illicit products every month, contributing to millions in tax losses.
An earlier operation uncovered a multimillion-dollar illegal distillery in Marurui, Kasarani, where equipment worth Sh14 million and 23,000 counterfeit excise stamps were seized.
In yet another operation, KRA officials seized 56,000 liters of ethanol valued at Sh26.9 million concealed as molasses, in Limuru, Kiambu, preventing a tax loss of over Sh20.5 million.
Weeks later, 7,500 liters of ethanol were intercepted at Lwakhakha border concealed in maize bags.
The operations are part of a broader effort by KRA and the DCI to dismantle the complex network of illegal liquor manufacturers, smuggling syndicates and counterfeit excise stamp producers operating in Kenya.
In addition to ethanol, KRA and DCI have seized thousands of cartons of counterfeit alcohol brands and smuggled goods disrupting the illicit trade that has flourished in various parts of the country.
The crackdown also led to the discovery of multiple illegal liquor depots in residential compounds across various counties.
In Oljororok, Nyandarua County, authorities seized 109 cartons of alcohol, 27 jerricans of ethanol, and 36,000 counterfeit excise stamps.
Other operations in Kacheliba (Trans Nzoia), Bureti (Kericho), and Sultan Hamud (Makueni) also yielded significant seizures of counterfeit alcoholic beverages and smuggled ethanol.
The KRA has emphasized that the domestic excise goods trade sector is a critical revenue mobilization area, contributing about 6 percent of the ordinary revenue collections from excise taxes.
In the financial year 2023/24, this sector contributed Sh73.624 billion out of the total revenue collection of Sh2.407 trillion.
This marked an increase from the previous year, where Sh68.1 billion was collected, demonstrating the sector's growing importance to Kenya's economy.
The operations have led to the arrest of several suspects, and many are facing tax fraud charges in courts across the country.
