This archive report was first published on 10 May 2021.
On May 10, 2021, the Kenya Revenue Authority's Commissioner of Customs and Border Control made a significant move by lifting restrictions on warehousing of goods in Customs bonded warehouses, a policy shift that was initially imposed in May 2020.
This decision, communicated through Gazette Notice no. 3738 dated 15 April 2021, is a welcome relief for businesses that utilize customs bonded warehouses to store goods, defer payment of duties, and engage in regional trade.
According to Maurice Mwaniki, Indirect Taxes Associate Director at PwC Kenya, the move is expected to contribute to the government's agenda of reviving the economy in light of the Covid-19 pandemic, improve cash flow and stock management for businesses.
Furthermore, Mwaniki noted that this decision will enhance the competitiveness of Kenya as a global and regional logistics hub, attracting inward investment into Kenya and the wider East African region.
However, the initial decision to stop warehousing of goods in bonded warehouses in May 2020 caught many investors by surprise, forcing businesses to re-evaluate their operations and potentially resulting in lost business opportunities for Kenya.
Given the challenges facing businesses, it is essential for tax policymakers to ensure tax laws are not changed frequently, as the lack of consistency can have a significant adverse impact on businesses.
Warehousing of goods is a common practice worldwide, with businesses relying on bonded warehousing to manage cash flow and secure global supply chains. By allowing businesses to warehouse goods without payment of duties, countries become more competitive and attractive to investors.
