This archive report was first published on 11 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 is a welcome relief for businesses that utilize customs bonded warehouses to store goods, defer payment of duties, and are involved in regional trade. According to Maurice Mwaniki, Indirect Taxes Associate Director at PwC Kenya, the move is expected to improve cash flow and stock management for businesses, contribute to the government's agenda of reviving the economy in light of the Covid-19 pandemic, and enhance the competitiveness of Kenya as a global and regional logistics hub.
“We expect that with Customs having lifted restrictions on warehousing of goods will help contribute to the Government’s agenda of reviving the economy in light of the ravages of the Covid-19 pandemic, improve cash flow and stock management for businesses,” commented Maurice Mwaniki.
However, the initial decision made in May 2020 to stop warehousing of goods in bonded caught many investors by surprise, forcing them to re-evaluate whether they would continue serving their customers across the region from Kenya. This may have resulted in Kenya losing business opportunities.
Given the challenges currently facing businesses, it is imperative for tax policymakers to ensure tax laws are not changed frequently, as the lack of consistency results in a significant adverse impact on businesses.
Warehousing of goods is not unique to Kenya; businesses worldwide rely on bonded warehousing to manage cash flow and secure global supply chains. By allowing businesses to warehouse goods without payment of duties makes countries competitive and more attractive to investors who are looking at Kenya as their preferred base for regional trade.
