Scrap metal dealers take to the border as council suspends issuance, renewal of licenses

A scrap metal site at Eldo Scrap Centre in Eldoret, Uasin Gishu County. [Peter Ochieng, Standard]

The Scrap Metal Council under the State Department of Industry has suspended the issuance and renewal of export licenses with immediate effect.

This, as it emerged that the Kenya Revenue Authority’s (KRA) requirement that businesses must operate with eTims accounts had led to an influx in the smuggling of scrap metal across the border.

Scrap Metal Council Chairman Francis Mugo announced the decision after what he termed as increased vandalism of critical State infrastructure such as power lines costing the country millions.

"The Council has resolved to suspend renewal and issuance of export licenses with immediate effect until further notice,” said Mugo in a statement to newsrooms.

“The country has been receiving so many applications of people who want to export scrap metal from Kenya while the country does not mine copper,” he added.

Mugo revealed that the introduction of the eTims system had also seen most scrap metal dealers sell their products across the border with Tanzania emerging as a top market.

"The council has not and will not allow unscrupulous businessmen to spoil the working atmosphere for others. Those smuggling scrap metal should be warned that their days are numbered," said Mugo.

He brought to the fore that the Namanga, Taveta Lunga-Lunga and Busia borders have become the favoured routes for traders to smuggle their illegal products.

The chairman however lauded KRA for its sustained war against the smugglers noting that 50 trailers smuggling scrap metal had so far been intercepted by the taxman this year alone.

Alluding to an incident where a trailer smuggling scrap batteries into Tanzania was intercepted on Friday, Mugo reiterated the Council's decision to suspend the issuance of licenses and warned that the law would eventually catch up with the unscrupulous traders.

The chairperson also urged the already licensed scrap metal dealers to operate within the law when exporting their goods.

“The association is currently engaging various stakeholders to ensure that the vice is completely eradicated. These consultations are aimed at sensitizing members on the need to operate within the ambit of the law," observed Mugo.

He further noted that the Council was relying on the amendment and subsequent full implementation of the Scrap Metal Act, 2015 to help the country deal with the scourge of smuggling and to also help it recruit more officers to deal with the illegality.

“One of the challenges the Council is facing is the limitation to hire its staff. The council gets secretariat service from the State Department for industry and so we cannot effectively vet scrap metal dealers as there are no inspectors gazetted due to the shortage of staff deployed to the council,” he remarked.

 Notably, all taxpayers doing business are required to be on board on eTIMS. This includes taxpayers not registered for VAT but are registered for turnover tax, monthly rental income, partnerships, corporation tax, and individual income tax (including non-residents with a permanent establishment in Kenya.

The objective of eTIMS is to reduce the cost of compliance for VAT-registered businesses. Businesses have however been sceptical about adopting eTims, fearing that it was a ploy by the government to have them pay more tax.

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