Kenya warns Tanzania in sweets tax row

Nairobi signals retaliation as Tanzania blocks confectionaries citing use of industrial sugar

The Kenya-Tanzania border at Namanga. Kenyan firms accuse neighbouring countries of using customs taxes to restrict trade in East Africa. PHOTO | JEFF ANGOTE | NMG 

IN SUMMARY

  • Dar has slapped a 25 per cent import duty on Kenyan firms in confectionery business
  • It cites use of imported zero-rated industrial sugar in the goods.
  • The EAC common market allows free movement of locally manufactured goods in the bloc.

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Kenya has has warned it will block the entry of Tanzanian goods into the country after Dar es Salaam’s refusal to allow duty-free entry of Kenyan-made confectionery, juice, ice cream and chewing gum.

Tanzanian authorities have been given up to the end of the month to visit the Kenyan firms to find out if imported industrial sugar is being used in the products at the centre of the trade spat which remains unresolved since March.

Dar slapped a 25 per cent import duty on Kenyan firms in confectionery business, citing use of imported zero-rated industrial sugar in the goods.

“Tanzania Verification Mission to visit Kenya on use of duty free sugar imports on confectioneries to be completed in two weeks (May 31, 2018).

"Failure to adhere will result in implementation of retaliatory measures,” said the report of a presidential roundtable.

“All manufacturers (have been) requested to comply and co-operate with the Tanzania Verification Mission.”

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Rejected certificates

Tanzania rejected certificates of origin issued by the Kenya Revenue Authority (KRA) and opted to levy 25 per cent import duty on Kenyan confectioneries.

Acceptance of the certificate — a document showing where a product has originated from and is used to determine duty for imported goods — guaranteed the entry of Kenyan goods tax-free passage to Uganda and Tanzania.

The East Africa Community common market made up of Tanzania, Kenya, Uganda, Rwanda and Burundi allows free movement of locally manufactured goods within the bloc.

Tanzania and Uganda revenue bodies have however accused Kenyan manufacturers of tilting competition in their favour by using industrial sugar imported under a 10 per cent duty remission scheme.

The region does not produce industrial sugar. But Kenyan firms have accused the two countries of using the customs taxes to restrict trade in East Africa.

KRA's intervention

The Kenya Association of Manufacturers (KAM) said late last month while Uganda had softened her hardline stance, the Tanzania Revenue Authority (TRA) had rejected evidence from the Kenyan Treasury showing the 14 companies that had benefitted from the window.

“The denial of entry for Kenyan goods into Tanzania continues despite KRA’s intervention to clarify the matter to its Tanzanian counterpart,” the manufacturers’ lobby said on April 26.

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