The Kenya Revenue Authority (KRA) has explained the circumstances surrounding the refund of Ksh 5 billion in taxes to Oil Marketing Companies (OMCs).
KRA defended its handling of the controversial MT Paloma fuel cargo, telling the Senate that the 66 million litres of petrol imported by One Petroleum were never consumed in Kenya and therefore qualified for a tax refund after being redirected to regional markets.
The tax authority said the amount had been paid by various OMCs through a principal importer during the clearance of petroleum products but was later reallocated following changes in customs declarations.
KRA Says It Refunded Ksh 5 Billion to Oil Marketers After Fuel Shipment Was Re-Exported
KRA Manager of Petroleum Monitoring, Bernard Kibiti, explained that oil marketers had already paid taxes on the cargo but did not take delivery through the Kenya Pipeline Company (KPC) system.
“The 66 million litres was allocated to different marketers and they paid the tax, but they did not access the product from the KPC system. Then they were told that that product should go back. Meaning you have paid money, about KSh 5 billion, but you have not taken the product,” Kibiti said.
“Meaning what happens is that I have to give you back your money. And the product that was transferred to you has to go back to the original exporter. The original importer then has to look for another market outside Kenya and take their product there.”
Also Read: Govt Issues Directive to All Importers as New System Tied to KRA and Safaricom is Unveiled
Details on MT Paloma Fuel Tax Adjustments
KRA Commissioner for Customs and Border Control Dr Lilian Nyawanda said the adjustments were necessary to align payments with subsequent fuel consignments following regulatory and administrative reviews within the petroleum supply chain.
She explained that the changes were made in line with customs procedures governing fuel imports, including tax assessment, documentation processing and cargo clearance.
Nyawanda further explained that the related customs entries have since been canceled and that taxes amounting to Ksh 5.1 billion paid by various Oil Marketing Companies (OMCs) through the principal importer, MT Paloma, are scheduled for transfer to customs declarations relating to subsequent fuel consignments.
KRA maintained that the refund will be issued to oil marketing companies, insisting that the product did not enter the local market and that the process is supported by customs records showing the fuel was reclassified as transit cargo.
“What the ministry directed was that, for each… based on the different oil marketers, subsequently there were more vessels coming in. So these subsequent vessels, you match an oil marketer based on their parcel or portion to a new declaration. So they were going to do a fresh entry, and then you do a transfer. Allocate this credit to a fresh entry,” she said.
Also Read: KRA Misses Ksh9.1 Billion Following Ruto’s Fuel Directive
Dr Nyawanda further clarified that KRA’s role in the petroleum sector is limited to customs administration, tax collection, transit control and trade facilitation, working alongside Partner Government Agencies responsible for quality assurance and compliance checks.
The authority noted that it continues to facilitate the smooth importation and distribution of petroleum products, ensuring that legitimate trade is not disrupted and compliance with tax and customs laws is maintained.
Follow our WhatsApp Channel and X Account for real-time news updates.
