Economy

KRA moves to get rid of bonded warehouse for consumer goods

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Times Tower. FILE PHOTO | NMG

Summary

  • Importers of a wide range of consumer goods - including food, used cars, alcohol, clothing and office supplies - will from October 12 be required to pay taxes immediately their cargo enters the country.
  • The Kenya Revenue Authority (KRA) had issued a notice eliminating the use of bonded warehouses for these goods, meaning the benefits of delayed payments of taxes and stock management will soon disappear

Importers of a wide range of consumer goods - including food, used cars, alcohol, clothing and office supplies - will from October 12 be required to pay taxes immediately their cargo enters the country.

The Kenya Revenue Authority (KRA) had issued a notice eliminating the use of bonded warehouses for these goods, meaning the benefits of delayed payments of taxes and stock management will soon disappear

The taxman extended the deadline of a notice which was supposed to kick in August after intensive lobbying a review on the list of goods locked out of the bonded warehouses.

“The coming to effect date was pushed forward by 60 days after industry has sought dialogue with various government entities, including the Ministry of Industrialisation, Trade and Cooperatives, The National Treasury. The stakeholders through their umbrella bodies (AKS, KIFWA, WASIA, SCEA) held a consultative meeting with KRA to discuss the concerns about the implementation of the gazette notice,” KRA said in an emailed response.

Shippers Council of Eastern Africa CEO Gilbert Langat said the moratorium was extended after protest that the cost of business will go up and Mombasa port would lose a competitive edge over the blanket directive.

“Bonded warehouse is an international concept and people do not just do it for convenience but rather for logistic and cash flow. We are currently having discussions on what items will be on the list,” Mr Langat said.

Analysts have warned that the drastic measure, aimed at sealing revenue loopholes and fast-tracking revenue collection, will have the unintended consequence of disrupting supply chains and hurting Kenya’s standing as a regional investment hub.