Opinion and Analysis
Come clean on process
Posted Wednesday, August 1 2012 at 21:03
The decision by the Kenya Revenue Authority to extend a faster cargo clearance procedure to qualifying companies within the East African Community is well intentioned.
The devil of such schemes - however - is always in the details. To become an authorised economic operator and with it gain relaxed passage through customs controls, a company needs to have a track record of complying with customs procedures and prompt payment of assessed taxes.
It is, therefore, essential that the vetting process be succinct with little room for oversight or error because this would open the door for rogue traders and logistics companies to flood the market with unwanted or undertaxed commodities.
To make the system transparent, KRA needs to sensitise all companies on the criteria used to grant the elevated status, the application and auditing process as well as the raft of benefits.
As it is now, it is difficult to tell how KRA picked the 64 companies that enjoy the status in Kenya and 11 others in the region to whom the benefit will be extended.
That KRA appears hesitant to disclose the identity of the companies could itself breed suspicion and defeat the very purpose for which the programme was initiated - to raise the compliance levels and ease trade.
That the status comes with many bragging rights should be incentive enough for companies to do business right and cascade the ethic down their supply chain.
Transparency could win the initiative broad acceptance, leading to higher revenue collections, faster trade and lower cost of doing business.