Scrap import levy from tax plan, Kepsa urges Rotich

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Kepsa chairman Vimal Shah. He says the charges are no longer tenable. PHOTO| FILE 

By George Omondi

In Summary

• Importers say the continued demand of the import declaration fee by Kenya Revenue Authority constitutes a double taxation and is hurting their business in a market shared by other East African competitors.

Kenyan investors have stepped up their call for the scrapping of the import declaration charges just two months before the Treasury unveils new taxation measures.

Importers say the continued demand of the import declaration fee by the Kenya Revenue Authority constitutes a double taxation and is hurting their business in a market shared by other East African competitors.

“The import fee serves no purpose at the moment. It should have been removed a long time ago,” says Kenya Private Sector Alliance chairman Vimal Shah.

“We have held several talks with the Treasury to have it abolished. If they have to keep it, let it be levied on finished goods only, not the raw materials that producers require to create exports,” he said.

Twenty years ago, Treasury introduced the pre-shipment inspection programme for all imports after it appointed three companies to inspect goods.

At the same time, Treasury introduced the import declaration forms (IDF) to fight tax evasion. An importer was required to obtain an IDF upon payment of a non-refundable Sh5,000.

The form was to be submitted to a pre-export inspection firm after the trader has given country of origin, type, size, and weight of the goods that they intend to ship into the country.

The pre-export inspection was later abolished after Kenya adopted the World Customs Organisation General Agreement on Trade and Tariffs (WC GATT) valuation model, which relies on value of goods as indicated on the invoice.

The Kenya Bureau of Standards (Kebs) has also been implementing its Pre-Export Verification of Conformity of standards (PVoC) programme since 2005.

Under the PVoC, a foreign trader who chooses to export goods to Kenya must have their documents checked and verified by Kebs at their own expense before such goods are shipped into the country.

Despite these charges, an importer in Kenya still has to pay Sh5,000 to obtain an IDF and later pay the import declaration fee at 2.25 per cent of the value of goods (less the Sh5,000 paid earlier) upon arrival of the consignment.

Kenyan importers say the adoption of WC GATT technique and the PVoC have rendered the IDF unnecessary in the business of importing goods.

“Everyone in the sector has said it should be abolished. We hope The Treasury will finally remove it,” said Ms Paida Nyamakanga, head of corporate communications at the Kenya Association of Manufacturers.

Treasury secretary Henry Rotich is expected to announce new tax measures in June. Should Kepsa have their way on the matter, Treasury would likely lose about Sh36 billion, the amount it collected last year through this window.

Kenyan traders say the IDF has worked against them as their competitors in Rwanda and Uganda are not subjected to such levies. Kenya has been working on common customs laws with Uganda, Tanzania, Rwanda and Burundi since 2005 when the five states launched the region’s custom union.