State goes after small importers to net more revenue

The Government is improving the policing of small-scale traders in the import business in a bid to increase tax revenue.

This will also ensure that good quality products are brought into the country.

This is to be undertaken through closer scrutiny of firms that import on behalf of small businesses, consolidating goods belonging to different businesses to fill up a container brought in by sea or air.

Inspecting consolidated goods before they leave import source markets is expected to help fight sub-standard imports and give the Government a better view of the taxes that importers should be paying.

The Kenya Bureau of Standards (Kebs) said it was concluding the process of certifying firms that import on behalf of SMEs, which it refers to as ‘consolidators’.

The standards body said it would issue temporary registration permits next week to firms cleared to undertake the consolidation business.

The consolidators will be required to operate warehouses in the import source markets with at least 10,000 square feet of storage available to them. Kebs-contracted inspectors will undertake pre-export certification of conformity at the warehouses, as is the process for most imports into Kenya.

“We will issue conditional registration certifications to consolidators who will qualify and over the next three months inspect their warehouses and if they meet the specifications, we will give certificates that will be renewable every year,” said the Kebs head of inspection, Eric Ochieng’

Counterfeit goods

In addition to upping the fight against high inflows of sub-standard, illicit and counterfeit goods, the Government also hopes to increase revenue collections from goods that are currently avoiding tax nets.

KRA officials said traders are able to conceal or under-declare goods and in many instances end up paying lower taxes than they should pay.

The consolidators will be required to keep a record of every item in their warehouses as well as the containers shipped into Kenya. The records will include the details of the owners, including their KRA personal identification numbers as well as the product brand names and value.

“Limited documentation is a thorn in our flesh ... there are many instances where importers bring high-end electronics but declare that it is just a television set and pay the minimum amount of duty. The end result is that KRA receives little revenue,” said KRA Deputy Commissioner for Customs and Border Control Kenneth Ochola.

Experience delays

Kebs said 62 companies had applied to be registered as consolidators, 50 had passed the basic qualification, and only half of these have been cleared to act as consolidators.

The small number of service providers qualifying as consolidators might mean that a large number of traders who rely on their services might see delays in getting stock for their clients in the local market.

The consolidation firms attending the Kebs forum yesterday, however, expressed concerns that the requirements and short timelines to comply might lock them and their SME clients out of the import business.

They noted that large importers could bring in one consignment what several SMEs would take months to import.