The Kenya Revenue Authority (KRA) is under renewed pressure from Parliament after lawmakers questioned the decision to grant tax exemptions worth nearly Sh3 billion on a controversial raw sugar import.
The issue emerged during a session of the National Assembly Departmental Committee on Trade, Industry and Cooperatives, where KRA defended its approval of the consignment, saying Mombasa Sugar Refinery Limited complied with all customs and regulatory requirements and paid approximately Sh500 million in import duty before the cargo was cleared.
However, members of the committee questioned why the importer was exempted from paying Value Added Tax (VAT), Excise Duty, the Import Declaration Fee, Railway Development Levy, Sugar Development Levy and Merchant Shipping Levy. The exemptions amounted to an estimated Sh2.98 billion in forgone tax revenue.
Lawmakers also expressed concern after KRA officials failed to produce documentation identifying the manufacturer of the imported sugar.
According to the committee, the records presented lacked key traceability information, including the manufacturing and expiry dates, making it difficult to independently establish the product’s origin and shelf life.
Committee Chairperson Bernard Shinali said both the circumstances surrounding the clearance of the consignment and the scale of the tax exemptions required thorough investigation.
The latest hearing expands Parliament’s inquiry into the 27,000-tonne shipment of raw sugar, which was imported for industrial refining but has since attracted growing scrutiny over regulatory compliance, storage and movement after arriving in Kenya.
The investigation gained momentum last month after members of the committee visited a refinery linked to the consignment in Kisumu and found it operational, despite earlier submissions indicating it was undergoing maintenance and unable to process the sugar.
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The discovery prompted concerns that lawmakers may have been misled about the refinery’s operational status.
MPs also questioned why part of the shipment was moved from bonded warehouses in Mombasa to storage facilities in Nairobi and Kisumu instead of being transported directly to the refinery, raising concerns over the integrity of the custody chain and the possibility of diversion.
The committee further examined the relationships between Kibos Sugar, Mombasa Sugar Company Limited and Mombasa Sugar Refinery Limited following questions surrounding licensing arrangements and the entities involved in importing the consignment.
Parliament has directed the relevant government agencies to provide comprehensive records covering the importation, storage and processing of the sugar as it seeks to establish whether the shipment complied with the law, was properly handled and whether the tax exemptions granted were justified.
