TZ ignores tax deal on Kenyan sweets

Tanzania has ignored a deal that granted Kenyan-made confectionery products such as chocolate, ice cream, biscuits and sweets unrestricted entry to its market.

EAC secretary Adan Mohamed. FILE PHOTO | NMG 

IN SUMMARY

  • Dar es Salaam continues to impose taxes on Kenyan- made confectionery products citing the use of zero-rated imported industrial sugar in the goods. This goes against a truce announced on July 5.
  • Tanzania and Uganda had earlier in the year slapped a 25 per cent duty on Kenyan-made confectionery, juice, ice cream and chewing gum.
  • East Africa Community common market made up of Tanzania, Kenya, Uganda, Rwanda and Burundi allows for free movement of locally manufactured goods within the bloc.

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Tanzania has ignored a deal that granted Kenyan-made confectionery products such as chocolate, ice cream, biscuits and sweets unrestricted entry to its market, setting the stage for a fresh round of trade wars.

Dar es Salaam continues to impose taxes on Kenyan- made confectionery products citing the use of zero-rated imported industrial sugar in the goods. This goes against a truce announced on July 5.

Tanzania and Uganda had earlier in the year slapped a 25 per cent duty on Kenyan-made confectionery, juice, ice cream and chewing gum.

Tanzanian and Ugandan authorities claimed use of zero-rated industrial sugar tilted competition in favour of Nairobi factories.

A joint statement on July 5 following months of talks between Kenya’s Trade PS Chris Kiptoo and his Tanzania counterpart Elisante ole Gabriel said a truce on trade tensions had been reached.

Yesterday, the Kenya Association of Manufacturers (KAM) chairman Sachen Gudka, said confectionery makers are still being subjected to taxes at the border with neighbouring EAC nations.

“There are still some products which are made from industrial sugar which are still unable to access some of our partner states at preferential (taxation) rates,” Mr Gudka said in Nairobi on Tuesday.

“We are working with the (East African Community) ministry to form a technical working group to find way forward on getting us back to our preferential status.”

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

The KAM chair spoke after manufacturers held a meeting with EAC secretary Adan Mohamed at ministry offices at the Co-operative House over rising tariff and non-tariff barriers which have hurt trade within the six-nation EAC bloc.

Mr Mohamed blamed roadblocks on Kenyan goods on junior government officials at the borders who are having problem interpreting EAC policy issues.

Disputes between EAC members are usually resolved at bilateral level, a situation the CS said prolongs resolutions of recurring disputes.

“We want the (EAC) secretariat to take a very strong leading role in addressing issues between member states,” Mr Mohamed said.

“Why are we having member states having to resolve issues within themselves, yet we have a secretariat that should be empowered and has the authority to interpret the rules?”

Dar has also restricted access of textiles products which enjoy tax incentives at the Export Promotion Zones (EPZs) in Athi River and cigarettes.

Nairobi did not ask for renewal of a year-long stay on duty on textiles from the Arusha-based EAC secretariat upon expiry in June, meaning EPZ textiles firms should pay tax on products they sell within EAC.

The tiff amongst EAC countries has hurt trade volumes.

Official statistics show Kenya’s exports to Uganda, Tanzania and Rwanda fell to Sh107.46 billion last year from Sh114.46 billion in 2016 and Sh120.04 billion in 2015, official statistics show.

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