•Commissioner for customs and border control had in May 2020 restricted about 17 types of goods from the facilities.
•Goods affected included wines and spirits, second-hand motor vehicles, clothing, textiles, office supplies, foodstuffs, cigarettes, toiletries and spare parts.
Image: CHARLES MGHENYI
Importers and traders in Kenya stand to benefit from the lifting of restrictions on the use of customs bonded warehouses in the country, consulting firm PricewaterhouseCoopers (PwC) now says.
This comes as the tax and audit experts urge policymakers to ensure tax laws are not changed frequently, as the lack of consistency results in significant adverse impact to businesses.
Kenya Revenue Authority (KRA)'s commissioner for customs and border control, has lifted restrictions on warehousing of goods in customs bonded warehouses imposed in May 2020.
A customs bonded warehouse is a warehouse licensed by the commissioner of customs for the storage of goods imported, into the region, pending the payment of duties.
The 2020 decision had an impact on about 17 types of products, which had been locked out of the warehousing system with importers forced to pay duty upon arrival of goods into the country.
Those affected during the period included wines and spirits, second-hand motor vehicles, clothing and textiles, office supplies, foodstuffs of any form including bulk commodities, cigarettes, toiletries, and spare parts.
Others were construction materials, electrical parts, cameras, phones, tyres, lubricants, used footwear, and furniture, which all attracted full customs duties on arrival.
Kenya Association of Manufacturers (KAM), Container Freight Stations (CFS) owners and players in the clearing and forwarding sector had in 2020 protested the which had a huge impact on small traders, who would traditionally benefit from the delayed payment of taxes that help manage cash flow.
The storage also allowed traders to manage stock and plan onwards movement of their goods from the warehouse.
The policy shift by the government is a relief for businesses that utilise customs bonded warehouses to store goods, defer payment of duties, and are involved in regional trade, PwC has said.
“We expect that with customs having lifted restrictions on warehousing of goods will improve cash flow and stock management for businesses,” said Maurice Mwaniki, Indirect Taxes Associate director at PwC Kenya.
The move will also enhance the competitiveness of Kenya as a global and regional logistics hub, he said, while attracting inward investment into Kenya and the wider East African region.
According to PwC, the initial decision to stop warehousing of goods in bonded facilities caught many investors by surprise, forcing businesses to re-evaluate whether they would continue serving their customers across the region from Kenya.
“Given the challenges currently facing businesses, it is imperative for tax policymakers to ensure tax laws are not changed frequently ” PwC said in a statement yesterday.
Businesses world-over rely on bonded warehousing to manage cash flow and secure global supply chains.
According to logistics experts, allowing businesses to warehouse goods without payment of duties makes countries competitive and more attractive to investors who are looking at a base for regional trade.
The move by KRA fits well into the government’s agenda of developing infrastructure to make Kenya a global and regional logistics hub.