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'Mitumba' clothes will cost you more

BUSINESS
By Dominic Omondi | July 13th 2016

Putting on second-hand clothes (mitumba) is going to get more expensive after the Government doubled levies.

According to the Finance Bill 2016, all imported clothes will attract a duty of $0.4 (Sh40.8) per kilogramme of clothes up from $0.2 (Sh20.4) per kilogramme in what the Government believes is the solution to the mitumba trade that has crippled the country’s textile industry.

Second-hand clothes, popularly known as mitumba, are mostly imported from North America and Europe.

Job Kabochi, a tax partner at audit firm PricewaterhouseCoopers (PWC), said that the Government has done this to encourage the struggling textile industry.

“To encourage local garment manufacturers the Government has also curtailed the importation of garments into the country. The Government has increased duties payable on imported garments to Kenya,” said Kabochi.

He added that there is a specific provision in the legislation which actually allows any garments which are manufactured by the country’s export processing zones (EPZs) and then sold locally in the local market to enjoy VAT exemption as well as duty remission.

Treasury Cabinet Secretary Henry Rotich in his Budget speech proposed to exempt from value-added tax (VAT) garments and leather footwear procured from EPZ.

“I have stayed the application of import duty and propose to exempt from VAT made up garments and leather footwear procured from the EPZ to enable Kenyans to acquire new clothes and shoes at affordable prices,” said Rotich.

It is not the first time the Government has proposed to stop the entry of mitumba into the country. Within the East African Community, there have been plans to ban mitumba. Most of these second-hand clothes are sold in Gikomba Market, Nairobi. It is estimated to hold close to 65,000 traders.

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