How Tobacco Company MTK Mints Money Out of Fake Cigarette ‘Export’ Scheme 

Sources say that huge quantities of cigarettes ‘transported’ in heavy-duty trucks meant for the export market are illegally offloaded on the local market and then sold locally at huge profits. Locally produced cigarette brands, marked for “Export only” are not subjected to local taxes like Value Added Tax (VAT)

Mastermind Tobacco Company is reportedly embroiled in a multi-million shilling tax evasion scandal with the Kenya Revenue Authority (KRA) which involves the cross-border illegal cigarettes exports trade, denying the taxman huge amounts of money in revenue.

Just recently at the High Court Nairobi, the company lost a multi-million shilling suit to KRA over a tax evasion suit, a ruling to which the Company Chief Executive Officer Wilfred Murungi immediately declared MTK would contest at the Court of Appeal. In that ruling, the Kenya Revenue Authority was mandated to go ahead and collect Kshs. 517 Million in tax arrears from Mastermind Tobacco Kenya Limited; it followed a decision by the Tax Appeals Tribunal which had found MTK culpable. That ruling involved taxes only due from locally produced cigarettes sold on the local market subject to VAT taxations amongst other levies.

Our investigative team has established that the most exploited brand, also popular in the neighbouring countries of Ugandan, Rwanda, Burundi and the Democratic Republic of Congo (DRC), Tanzania and South Sudan is the company’s flagship brand ‘Supermatch’

Sources say that huge quantities of the cigarettes transported in heavy-duty trucks meant for the export market are illegally offloaded on the local market and then sold locally at huge profits. Locally produced cigarette brands, marked for “Export only” are not subjected to local taxes like Value Added Tax (VAT) among other taxes. Sources at the company also told The Weekly Vision that the company has for a long time failed to submit genuine tax returns to KRA and even when they do, the books are grossly manipulated.

Our investigative team has established that the most exploited brand, also popular in the neighbouring countries of Ugandan, Rwanda, Burundi and the Democratic Republic of Congo (DRC), Tanzania and South Sudan is the company’s flagship brand ‘Supermatch’. Other popular brands made by MTK include Kings Soft, Supermatch Menthol, Rocket, Supermatch Hinge Lid, Ralli Kings, Ralli Menthol, Comet, Summit, Superman, Rally Kings and Super MTK. 

Through the company’s elaborate established networks, the “Export Only” brand is in some cases ‘exported’ only to be smuggled back into the country for sale on the local marketMTK has since morphed itself into a conglomerate with business interests spread across the region, with subsidiaries in Uganda, Tanzania, Malawi, Zambia, South Sudan, and the DRC. MTK, through its illicit smuggling business across borders, the company offloads hundreds of tonnes of cigarettes in boxes meant for export on the local market, right under the nose of KRA, the Police, and the Immigration department weekly.

The Kenya National Chamber of Commerce and Industry (KNCCI) Lake Basin Counties Economic Caucus says that in their estimates, MTK rakes in more than Kshs. 240 million shillings annually “exporting cigarettes to Uganda alone. “That figure is a conservative estimate, but the money involved could be more, ” KNCCI regional spokesman Herman Kasili was quoted as saying. 

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