This archive report was first published on 25 May 2020.
Kenya's importers of consumer goods, including food, used cars, alcohol, clothing, and office supplies, will soon face instant tax demands upon arrival in the country.
As of August 12, 2020, the Kenya Revenue Authority (KRA) will no longer allow the use of bonded warehouses for these goods, effectively eliminating the benefits of delayed payments of taxes and stock management.
According to a notice published in the Kenya Gazette on May 13, 2020, the KRA has issued this directive based on powers granted under Regulation 64(k) of the East African Community Customs Management Act Regulations, 2010.
Only local manufacturers and new motor vehicle dealers, such as East African Breweries Limited, BAT Kenya, and Toyota Kenya, have been exempted from this policy change.
Analysts have warned that this drastic measure will disrupt supply chains and negatively impact Kenya's standing as a regional investment hub.
Small businesses, which often suffer from constrained working capital, are likely to be the most affected by this change.
Business advisory firm PricewaterhouseCoopers (PwC) has expressed concerns that the directive will make Kenya uncompetitive and less attractive to investors, contradicting the government's agenda of developing infrastructure to make the country a global and regional logistics hub.
