The taxman plans to start opening containers to compute taxes item by item in a shift that will hit small traders who import in a pool and were paying taxes per kilogramme.
In yet another attempt to collect more taxes from small traders, the Kenya Revenue Authority (KRA) will unbundle the goods with individual traders expected to pay taxes for each item they ship into the country. It means that these items, which end up in open-air markets such as Gikomba and Nyamakima, will now attract import duties, Value Added Taxes (VAT), excise duty, import declaration levy (IDL) and Railway Development Levy (RDL).
This will increase the cost of consolidated cargo, which at the moment attracts a duty of Sh200 per kilogramme for air cargo or Sh2.2 million for a 40-foot container brought in through the sea. Consolidators are charging traders Sh896 ($7) for a kilo of cargo transported through the air and Sh640 ($5) shipped by sea.
This comes at a time traders are already dealing with the high cost of imports driven by the weakening of the shilling. The shift is one of the measures through which the administration of President William Ruto will be hoping to unlock billions of shillings in tax revenues as it targets to collect as much as Sh3 trillion in the upcoming financial year.
The taxman reckons that these levies do not reflect the true value of this trade with the imports into the country rising sharply over the last decade. The KRA notes that Kenya is a signatory to the World Trade Organisation (WTO) General Agreement on Tariffs and Trade (GATT) in the valuation of imports.
“KRA further applies minimum test yields in the assessment of imports to avoid unfair competition and forestall tax evasion. It is important to note that undeclared/concealed items are assessed and subjected to additional taxes,” said KRA Customs and Border Control Commissioner Pamela Ahago.
“KRA continues to address issues of concealment and undeclared items through ports of entry to ensure everyone pays their fair share of taxes.”
Small traders could now start paying import duty ranging from zero percent for raw materials to 10 percent for intermediate goods and 25 percent for finished products. The bulk of small traders’ imports finished products from China and Dubai, which means they will be slapped with a higher tariff of 25 percent.
Except for a few exempted goods, they will also pay the 16 percent VAT as well as excise duty for excisable goods. Imports also attract import declaration fees at 3.5 percent and a two percent railway development levy.