Economy

Taxman imposes tough rules on ‘Kitenge’ fabric imports

KITENGE

Clothes made of Kitenge displayed at a Nairobi outlet. FILE PHOTO | NMG

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Summary

  • African wax print fabric commonly known as ‘Kitenge’ will now undergo 100 percent verification in stringent measures by the taxman aimed at subjecting importers to tighter checks in a race to seal tax leakages.
  • The Kenya Revenue Authority (KRA) says in a memo dated November 11 that the checks would ascertain the description, quality and quantity of the fabric to allow for proper valuation.

African wax print fabric commonly known as ‘Kitenge’ will now undergo 100 percent verification in stringent measures by the taxman aimed at subjecting importers to tighter checks in a race to seal tax leakages.

The Kenya Revenue Authority (KRA) says in a memo dated November 11 that the checks would ascertain the description, quality and quantity of the fabric to allow for proper valuation.

“Going forward, from the date of this memo, it is now expected that clearance of Kitenge and textile materials to be verified 100 percent and photos to be taken and attached in the system,” says the KRA in the memo.

The development is set to delay the clearance of the fabric, which is gaining traction in the region. Importers have been using arbitrary values when declaring Kitenge at the port of entry, which appears to disregard the quality of the fabric.

Some importers have also been using generic description — “textile materials” — or falsely declaring their goods as mixed fabrics to avoid paying the requisite duty for full container loads of Kitenge.

But to seal the loopholes, KRA says all imported consignments described as “textile materials” should also be subjected to physical verification before releasing at the places of discharge.

Such consignments, the taxman says, should be excluded from the “Port Clearance Model”, which allows release without physical verification.

“To avert the release of the many pending consignments of Kitenge or textile materials, without proper verification, about 60 containerised cargo will now be subjected to close monitoring before entry,” says the KRA.

The taxman is subjecting Kitenge and other textile materials to tighter checks barely a day after it flagged the operations of 20 clearing and forwarding agents based at the Mombasa port.

The firms were found to have “non-compliance issues” after several risk analyses.

The KRA has been intensifying its crackdown on tax cheats using various databases, including bank statements, import records, Kenya Power records, motor vehicle registration details, water bills and data from the Kenya Civil Aviation Authority, which reveals individuals who own assets such as aircraft.

The taxman has in the past two years also been seeking details of suppliers and contractors hired by county governments.

This followed a steep increase in imports of the luxury goods and multi-million-shilling investments in real estate — an indication that some crooks could be evading payment of tax.

Last week, KRA commissioner-general Githii Mburu said his officers are now spending time on social media, trolling Kenyans posting photos of luxury cars, throwing expensive parties, living lavishly to ensure their taxes are in tandem with their image.

The taxman wants socialites and individuals who display lavish lifestyles on the interwebs to pay their fair share of taxes as it races to bring more people into the tax bracket.