(3 Minutes Read)
The move will reduce the imposition of fees for imported goods that are not commensurate with the services rendered. The Finance Bill which is before Parliament also highlights and proposes that 10% of total IDF collection be used as Kenya’s contribution to the African Union and other international organizations, while 20% be allocated to revenue enforcement initiatives or programs.
Shippers in the East Africa region want part of the Import Declaration Fee (IDF) channelled to state agencies that they engage with to cut multiple levies. The National Treasury plans to increase IDF payable on customs value of imports from the current 2.5% to 3%, a move local manufacturers and shippers say will push up production costs.
Neighbouring countries do not charge IDF, which gives shippers an advantage. For instance, Tanzania has its import levy at less than 2%, thus giving it a competitive advantage, according to the industry players.
The Shippers Council of Eastern Africa (SCEA) asked Parliament to make amendments to have at least 70% of the IDF channeled towards operations at the Kenya Bureau of Standards (Kebs), Kenya Trade Network Agency (KenTrade), and Kenya Plant Health Inspectorate Service (KEPHIS). Others are Port Health, Agriculture and Food Authority, and the Horticultural Crops Directorate.
The move, he said, will reduce the imposition of fees for the imported goods that are not commensurate with the services rendered. The Finance Bill which is before Parliament also highlights and proposes that 10% of total IDF collection be used as Kenya’s contribution to the African Union and other international organizations, while 20% be allocated to revenue enforcement initiatives or programs.
To support the manufacturing and agribusiness in the country, raw materials, intermediaries, fertilizer, packaging materials, and equipment, the industry had proposed that IDF be reduced to tax-exempt. Customs is the second biggest revenue source for KRA after domestic taxes, as Kenya remains a net importer. The taxman netted Sh754.1 billion in the financial year 2022-23 from customs taxes, including IDF.IDF closed half-year to December 2023 at Sh23 billion, with an annual average of Sh45 billion.
Despite overall import values increasing by 15.3 per cent, customs taxes performance was in part affected by growth in exemptions and remissions, which grew by 39.7 %, driven by special exemptions accorded to rice, maize, sugar, and cooking oil.
KenTrade is among state agencies that have come under sharp criticism for introducing fresh user fees on its platform, which importers and exporters term an additional cost. The State agency that runs the National Electronic Single Window System, an automated platform that allows parties in trade and transport to lodge documents and seek clearance, has introduced several charges in a move to raise revenue to meet budgetary needs.
Read Also:
https://trendsnafrica.com/kenya-hundreds-protest-on-tax-hikes/
https://trendsnafrica.com/kenya-to-modernise-its-railways-with-wb-assistance/
KenTrade has introduced a USD 50 (Sh6,463) user fee for new registration applications, effective May 20. It is also charging a similar amount as the annual access fee.
