Importers to pay tax on transit cargo in Mombasa

MOMBASA: Taxes on goods imported through Kenya but destined for other countries will be paid in Mombasa in new changes to tackle diversion of transit cargo.

A meeting of the regional heads of tax collection agencies including the Kenya Revenue Authority resolved to have importers pay at the port of entry. “The Single Customs Territory will ensure that assessment and collection of taxes for goods destined for countries in East Africa is done at the port of entry,” KRA boss John Njiraini said yesterday.

Previously, taxes on transit cargo were payable after the commodities arrive at the final destinations. It has however been impossible to monitor and track the thousands of trucks moving the cargo to ensure the commodities actually leave the country.

Importers exploited that loophole to divert cargo, and often, only the security locks used to secure containers are taken to the border crossing points to conceal the fake handover. KRA has acknowledged that its own staff would be complacent in aiding such schemes, all aimed at evading taxes.

Mr Njiraini added that the East African nations including Uganda, Tanzania and Rwanda are integrating their Customs systems to make it possible for the three countries to have a regional bond for goods in transit.

A communique issued following the weekend meeting indicates that the taxmen are exploring new ways to simplify and harmonise tax procedures to enhance regional trade. Njiraini said that the regional bosses sought ways of fighting tax evasion, especially excise duty which is levied on non-essential commodities including vehicles, beer and cigarettes.

Each country has a different excise duty regime which means that a Kenyan could import a car to Uganda where taxes are lower, for use at home. Varying taxation schedules also provide an incentive to smuggle commodities across borders. The taxmen have committed to fast-track the adoption of Excise Goods Management System solutions to curb illicit trade in excisable goods.