Kenya’s import-dependent economy faces a jolt as increased charges for railway development and product declaration take effect under Finance Act 2019.
The Kenya Revenue Authority has revised rates of railway development levy (RDL) to two percent, up from 1.5 percent, and the import declaration fee (IDF) to 3.5 percent, from two percent.
“The rate of RDL has been increased on all imported goods except raw materials and intermediate goods while the rate of IDF has increased to 3.5 per cent with effect from 07 November 2019,” reads part of the reminder notice to importers.
The enhanced rates, which are applicable to finished goods are set to fuel a new wave of consumer goods price increases known as imported inflation.
Shippers Council of Eastern Africa executive officer Gilbert Langat said the impact of increasing the two levies amounted to double taxation on importers.
“RDL is an additional charge since it is paid in all imported goods and this will have ripple effects on consumers,” said Mr Langat.
“We are being encouraged to import in bulk but we can no longer afford to import large quantities since each item is subjected to about Sh5,000 advance IDF and this will be very expensive to traders who import millions of units.”
At a pre-Budget meeting with President Uhuru Kenyatta, the private sector gave nod to the introduction of new levies in exchange for reduced IDF on intermediate goods and raw materials used by manufacturers from two to 1.5 percent.
The deal also sought to cushion manufacturers from RDL as importers of finished goods incurred the enhanced charges.
Kenya relies on importation of food items and manufactured goods including clothes, utensils, electronics and vehicles.
The railway development charges were introduced in 2013 to help fund the construction and operations of the line to finance multi-billion-shilling projects.