Relief for traders as KRA lifts restrictions on warehousing goods

Kenya Revenue Authority’s (KRA) commissioner for customs and border control has lifted restrictions imposed in May 2020 on warehousing of goods in customs bonded warehouses.

According to PwC, a consulting firm, the lifting of restrictions on the use of customs bonded warehouses in Kenya will benefit importers and traders. Customs bonded warehouses have been granted permission by the commissioner of customs to store goods that have been imported into the country pending payment of duties.

Around 17 types of products were locked out of the warehousing system as a result of the 2020 restrictions, with importers forced to pay duty upon arrival of goods into the country. Wines and spirits, used automobiles, clothing and textiles, office supplies, foodstuffs of any sort, including bulk goods, cigarettes, toiletries, and spare parts were among those affected during the time.

Other products included construction materials, electrical parts, electrical parts, cameras, phones, tyres, lubricants, used footwear, and furniture. All these attracted full customs duties on arrival.

Inconsistency in tax laws negatively affecting businesses  

This comes as tax audit experts call on policymakers to ensure that tax laws do not change frequently as inconsistency has a significant negative impact on businesses.

Many investors were caught off-guard by the initial decision to stop warehousing goods in the customs bonded warehouses, forcing businesses to reconsider whether they will continue to serve customers across the Kenyan Region.

In 2020, the Kenya Association of Manufacturers (KAM), Container Freight Stations (CFS) owners and players in the clearing and forwarding sector protested the restrictions which had a significant effect on small traders who would normally benefit from delayed tax payments that help control cash flow.

The storage also helped traders manage stock and schedule onward transfer of their products from the warehouse.

PwC notes that the lifting of the restrictions is a relief for businesses that use customs bonded warehouses to store their goods, delay duty payments and engage in regional trade.  

“We expect that with customs having lifted restrictions on warehousing of goods will help contribute to the government’s agenda of reviving the economy in light of the ravages of the Covid-19 pandemic, improve cash flow and stock management for businesses.” Maurice Mwaniki, Indirect Taxes Associate Director, PwC Kenya.

“Given the challenges currently facing businesses, it is important for tax policymakers to ensure that tax laws are not changed frequently.” PwC.

Businesses all over the world depend on bonded warehousing to control cash flow and secure global supply chains. Besides, according to logistics experts, allowing businesses to store goods without paying tariffs makes countries more competitive and appealing to investors looking for a regional trade base.

According to Mwaniki, the move would boost Kenya’s competitiveness as a global and regional logistics hub as well as draw inward investment to Kenya and the wider East African Region. id=”�H6���Z

Kenya Revenue Authority’s (KRA) commissioner for customs and border control has lifted restrictions imposed in May 2020 on warehousing of goods in customs bonded warehouses.

According to PwC, a consulting firm, the lifting of restrictions on the use of customs bonded warehouses in Kenya will benefit importers and traders. Customs bonded warehouses have been granted permission by the commissioner of customs to store goods that have been imported into the country pending payment of duties.

Around 17 types of products were locked out of the warehousing system as a result of the 2020 restrictions, with importers forced to pay duty upon arrival of goods into the country. Wines and spirits, used automobiles, clothing and textiles, office supplies, foodstuffs of any sort, including bulk goods, cigarettes, toiletries, and spare parts were among those affected during the time.

Other products included construction materials, electrical parts, electrical parts, cameras, phones, tyres, lubricants, used footwear, and furniture. All these attracted full customs duties on arrival.

Inconsistency in tax laws negatively affecting businesses  

This comes as tax audit experts call on policymakers to ensure that tax laws do not change frequently as inconsistency has a significant negative impact on businesses.

Many investors were caught off-guard by the initial decision to stop warehousing goods in the customs bonded warehouses, forcing businesses to reconsider whether they will continue to serve customers across the Kenyan Region.

In 2020, the Kenya Association of Manufacturers (KAM), Container Freight Stations (CFS) owners and players in the clearing and forwarding sector protested the restrictions which had a significant effect on small traders who would normally benefit from delayed tax payments that help control cash flow.

The storage also helped traders manage stock and schedule onward transfer of their products from the warehouse.

PwC notes that the lifting of the restrictions is a relief for businesses that use customs bonded warehouses to store their goods, delay duty payments and engage in regional trade.  

“We expect that with customs having lifted restrictions on warehousing of goods will help contribute to the government’s agenda of reviving the economy in light of the ravages of the Covid-19 pandemic, improve cash flow and stock management for businesses.” Maurice Mwaniki, Indirect Taxes Associate Director, PwC Kenya.

“Given the challenges currently facing businesses, it is important for tax policymakers to ensure that tax laws are not changed frequently.” PwC.

Businesses all over the world depend on bonded warehousing to control cash flow and secure global supply chains. Besides, according to logistics experts, allowing businesses to store goods without paying tariffs makes countries more competitive and appealing to investors looking for a regional trade base.

According to Mwaniki, the move would boost Kenya’s competitiveness as a global and regional logistics hub as well as draw inward investment to Kenya and the wider East African Region. “