KRA reverses order on exports to EA bloc

The Kenya Revenue Authority has reversed a directive compelling Kenyan traders to declare shipments to the east African market through its Simba system, ending a month of uncertainty.

The withdrawal of a directive issued to exporters and clearing agents last month took effect on Friday.

“All such goods will now be declared under the Single Customs Territory procedures only”, Mr Julius Musyoki, KRA’s acting Commissioner of Customs and Border Control, said on Friday.

The taxman on July 2 ordered traders servicing the EAC markets to declare their exports on the Simba cargo clearance system amid concern over a backlog of tax refunds claims, which have remained a thorny issue for KRA and the Treasury with traders pushing for reimbursement of money owed to them.

Delayed payment of tax refunds has forced some businesses to borrow from banks in order to meet their cash flow needs, adding to the high cost of doing business in Kenya.

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“In order to facilitate VAT refunds pertaining to exports destined to East African Community (EAC) partner states, all exporters or clearing agents will now be required to declare their exports through the Simba system while importers in the country of destination will continue lodging import entries in the ASCYUDA/TACTIS system,” KRA said in a notice to traders and agents on July 2.

As at December last year the government owed traders about Sh30 billion in VAT refunds accumulated over the years partly due to lack of a reliable system to capture and audit claims by the business community. The Treasury has however since began processing some of the refunds.

Sources at KRA said the agency opted to reverse the order to avoid confusion given the fact that most goods are now traded on the seamless Single Customs Territory (SCT) window.

Kenya currently lacks an integrated customs management system aligned with those used by other EAC partner states. KRA is procuring a new system to be interlinked with those used by EAC partners.

Tanzania uses the Tanzania Customs Integrated System (TANCIS) while Burundi, Rwanda and Uganda use the Automated System for Customs Data (ASYCUDA) while Kenya has the Simba system.

This has made it difficult to track the movement of goods, clear levies or stay updated on tax refunds at a time when the bloc is moving to fully adopt the SCT arrangement — which allows for joint collection of customs taxes by the EAC partners.

Under the SCT deal that began on April 1, 2014, clearing agents within EAC have been granted rights to relocate and carry out their duties in any of the partner states as part of a strategy to improve the flow of goods and curb dumping.