The Kenya Revenue Authority’s amnesty on small traders whose goods are being held at entry ports is a pragmatic move that could yield more cash for the taxman in the long-run.
The temporary reprieve has potential to build much-needed trust between the taxman and the traders, creating a win-win outcome where KRA stands to collect more revenue in future while the traders find it easier to do business without worrying about non-compliance with regulatory requirements. It is also noteworthy that the highest office in the land is taking note of the small traders’ quandary, as demonstrated by Thursday’s attendance of a consultative meeting by President Uhuru Kenyatta’s chief of staff Nzioka Waita.
The value of goods impounded by KRA, Kenya Bureau of Standards and the Anti-Counterfeit Agency; estimated at Sh10 billion, is significant enough to register on the national economic radar.
The traders claim ignorance, arguing that they were not well-versed with import tax and quality standards requirements when they shipped in their goods. There is a chance that a good number could be telling the truth, but there is also a chance that an equally big number is lying to evade paying tax. The small traders have for decades existed in a grey area of the economy where they are neither formal nor fully informal.
They move billions of shillings turnover but the bustling business activity is not captured in their tax payments.
What the KRA, Kebs and the anti-counterfeit agency need to do now is to take further steps to ensure that the kind of impasse witnessed in recent months does not recur in future. Collective punishment of the traders by impounding containers of goods where only a few items are found to be in breach must be avoided at all costs.
The traders are right when they say that they have no expertise to distinguish between sub-standard goods and genuine ones on their own.
The pre-shipment agencies hired to monitor imports at the point of origin must therefore do their job and take responsibility whenever there is a lapse in quality standards. The small traders must also play their part in the economy by declaring and paying due taxes in full.
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Note: The results are not exact but very close to the actual.
