This archive report was first published on 10 May 2021.
On 15 April 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, is a welcome relief for businesses that utilize customs bonded warehouses to store goods, defer payment of duties, and engage in regional trade.
"We expect that with Customs having lifted restrictions on warehousing of goods, it will 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," said Maurice Mwaniki, Indirect Taxes Associate Director at PwC Kenya.
According to Mwaniki, this move will also enhance the competitiveness of Kenya as a global and regional logistics hub, attract inward investment into Kenya and the wider East African region, and improve the country's attractiveness to investors.
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 leading to lost business opportunities.
Given the challenges currently 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, and allowing businesses to warehouse goods without payment of duties makes countries competitive and more attractive to investors.
