How Indian, KRA syndicate is evading tax, dumping unaccustomed apparel in Kenyan market

Investigations have revealed that in Nairobi alone, the clandestine ‘promotion exhibitions’ are held in high end malls within Highridge, Parklands, Westlands and Gigiri leafy suburbs.

A multi-million shillings clandestine business syndicate is now operating in Nairobi involving apparel traders and top fashion designers from India who are now flocking into the country to sell and dump unaccustomed merchandise

The syndicate involves foreign merchants from India who frequently come in droves at short intervals, to sale highly priced ready-made Asian garments, jewelry, shoes and other related apparels while disguised as ‘promotion exhibitors.

Investigations have revealed that in Nairobi alone, the clandestine ‘promotion exhibitions’ are held in high end malls within Highridge, Parklands, Westlands and Gigiri leafy suburbs. In some instances, they are organised as Asians traditional and cultural events purportedly to showcase Asian community fashion and lifestyle for various ceremonies such as weddings and religious events like Diwali.

In our investigations early last month, we found an exhibition that was held at a new ultra-modern shopping mall in Highridge area. The three-day event dubbed Asia Wedding Lounge Nairobi – 2019 was held at the magnificent Diamond Plaza II owned by billionaire Kenyan Asian businessman Chatur between April 5 and 7.

The exhibitions are reportedly organised by crafty Kenyan Asians in cahoots with top notch designers and merchants, all from India. Kenyan merchants claimed Immigration officials were concealing the syndicate by allowing in the foreign competitors on “falsified documentation.”

They have been operating for the last four years, with relevant and compromised arms of the government and agencies according them a blind eye.

Investigations have divulged that the syndicate is operating with the blessing officials from Kenya Revenue Authority (KRA), Nairobi City County Government and the Department of Immigration.

In our investigations early last month, we found an exhibition that was held at a new ultra-modern shopping mall in Highridge area. The three-day event dubbed Asia Wedding Lounge Nairobi – 2019 was held at the magnificent Diamond Plaza II owned by billionaire Kenyan Asian businessman Chatur between April 5 and 7.

Unconfirmed reports indicate that foreign Asian merchants enter the country on permits granted to persons coming in to hold promotional exhibition of their products. Instead, they take advantage to sale and dump untaxed apparels in the Kenyan market, effectively killing impacting on local businesses by local traders from the Asian community.

“The exhibitions have completely ruined our businesses. Most of us have opted to downsize our operations including reduction of employees just to survive. But some businesses are on the verge of collapsing and they will close down due to the unfair competition,” said one trader who sought anonymity.

Our findings reveal that local Asian merchants dealing in the traditional community apparels are now hanging with declining sells and businesses facing imminent shutdown.

Their efforts to reach out to relevant government authorities over the last three years have not yielded and fruits, while the growing frequency of foreign exhibitions continues to ravenously eat into their means of livelihood.

“The exhibitions have completely ruined our businesses. Most of us have opted to downsize our operations including reduction of employees just to survive. But some businesses are on the verge of collapsing and they will close down due to the unfair competition,” said one trader who sought anonymity.

On January 29 this year, a group of 30 merchants trading in Asian apparels in Nairobi, through their lawyers E. N. Nderitu and Company Advocates, wrote to the Commissioner General of KRA, director of Immigration, Nairobi City County Government and the Ministry of Industry, Trade and Co-operatives, to protest about a planned – Asia Wedding Lounge fashion extravaganza.

A month later, however, the exhibition proceeded as earlier planned, without any action being taken to forestall illicit sales.

A spot check on the three-day event that held on the 12th floor of Diamond Plaza II starting on 5th April confirmed the exhibitors selling their merchandise. It was evident that ETR sales receipts were not issued to the buyers, a clear confirmation of tax evasion by the foreign Indian merchants at the Asia Wedding Lounge exhibition.

Earlier, on 23 August, 2017, the local Asian business community, through their lawyers Gaita and Company Advocates, wrote to the Office of the Commissioner General of KRA to blow a whistle about the illegal sale of untaxed goods by exhibitors from India.

In the letter, the traders listed several exhibitions that had been lined up for the month of September 2017 at different venues in Nairobi, Kisumu and Mombasa.

It was copied to the Cabinet Secretary, Ministry of Industry, Trade and Co-operatives, Customs Services Department, Principal Immigration Officer, Nairobi City County and the Ethics and Anti – Corruption Commission for action.

At the end of this month, another exhibition dubbed – DIVAlicious Fashion & Lifestyle EXHIBITION is slated to be held at the Trade Mark Hotel, Village Market and all spaces are already sold out.