Revealed: How Dutch firm evaded paying Ksh.62 billion taxes in palm oil import deal

Netherlands-based Louis Dreyfus Company (LDC), an agricultural commodities trading firm with operations in Kenya, is at the centre of a storm over alleged importation and tax evasion.

Documents obtained by Citizen TV suggest that LDC may have evaded duties and levies worth over Ksh.62 billion in a multi-billion shilling palm oil importation deal.

The documents reveal that over three consecutive years - 2022, 2023, and 2024 - LDC has been importing finished palm oil while mis-declaring it as crude to avoid paying the appropriate duties.

The company has reportedly used a blend of 40% refined oil and 60% crude palm oil in the same ship tanks, a practice that contravenes World Customs Organization guidelines.

According to these guidelines, any adulterated cargo cannot be classified as crude palm oil, and duties should be applied to the entire cargo.

In 2022, LDC imported 233,000 tons of palm oil, which should have incurred an import duty of $500 per ton, or Ksh.64,000 at today’s rate. This would have resulted in a total duty of $116,500,000 (Ksh.14.912 billion).

Additionally, the company would have been liable for an import declaration levy of $2.5%, totalling $2,914,500 (Ksh.372,800,000), a Railways Development Levy (RDL) of 1.5% amounting to $1,747,500 (Ksh.218,437,500), and a Value Added Tax (VAT) of $16 per ton, totalling $18,640,000.

For 2023 and the first half of 2024, the government reportedly lost an additional Ksh.32,540,860,750 and Ksh.13,831,909,230, respectively. In total, the losses amount to Ksh.62,863,256,440 over the three years.

Citizen TV has also learned that by importing crude palm oil from Asia, LDC saves approximately $70 per ton, or Ksh.8,960 at today’s rate, as refined palm oil exports from Indonesia and Malaysia are not subject to export duties.

Shipping documents in our possession indicate that the company uses "pre-enter clearance" by submitting necessary documentation and information about their shipment before it arrives at the Port of Mombasa. This allows for faster clearance at the port, as most paperwork and checks are completed in advance.

The question now is how LDC has managed to remain under the radar of the tax authorities and how the goods were inspected without being flagged, leading to these substantial revenue losses.

Efforts to obtain a comment from the Kenya Revenue Authority (KRA) have been unsuccessful, and attempts to reach LDC through the contacts provided on their website have also failed.