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Kenya backtracks on transit tax

By Vision Reporter

Added 20th September 2012 01:03 PM

Kenyan Revenue Authority (KRA) on Monday night agreed to immediately halt the transit cash bond imposed on Ugandan bound sugar and motor vehicles earlier this month.This followed lengthy deliberations between KRA, the Uganda Revenue Authority (URA) and Ugandan foreign service officials, regarding an international trade standoff that had seen about 600 containers of sugar and 2,000 vehicles held up following the institution of a transit cash bond by KRA.

Kenyan Revenue Authority (KRA) on Monday night agreed to immediately halt the transit cash bond imposed on Ugandan bound sugar and motor vehicles earlier this month.This followed lengthy deliberations between KRA, the Uganda Revenue Authority (URA) and Ugandan foreign service officials, regarding an international trade standoff that had seen about 600 containers of sugar and 2,000 vehicles held up following the institution of a transit cash bond by KRA.

By David Mugabe

Kenyan Revenue Authority (KRA) on Monday night agreed to immediately halt the transit cash bond imposed on Ugandan bound sugar and motor vehicles earlier this month.

This followed lengthy deliberations between KRA, the Uganda Revenue Authority (URA) and Ugandan foreign service officials, regarding an international trade standoff that had seen about 600 containers of sugar and 2,000 vehicles held up following the institution of a transit cash bond by KRA.

“The measures (lifting the cash bonds) take effect today (Tuesday).

“We noted this down and signed them to make sure they are implemented,” said Richard Kamajugo, the URA commissioner for customs who took part in the late Monday negotiations.

KRA had directed that transit goods destined to Uganda execute a cash bond equivalent to the tax value of the consignments that would be imposed on the same goods were they to be sold in Kenya.

Kamajugo explained that there were three areas of dispute between URA and the KRA directive issued on August 29.

First, he said, was the cash bond imposed on sugar imports into Uganda.  Second was cash bond on motor vehicles greater than 2,000 cubic centimetres, while the third was cash bond on sugar imports from Uganda.

Following the trade-off that had caused fury among importers and local authorities who described it as a move hurting inland state’s businesses, the cash bond on sugar was lifted immediately.
The sugar in transit that had not been declared by KRA will be covered by the normal practice of an insurane bond called a “particular bond” to ease accountability.

“There were consignments held in Kisumu, Busia and Malaba.

“Since we are also importing a lot of sugar, they will test the sugar to allay their fears and confirm that we are also making a lot of sugar and importing there,” said Kamajugo.

The cash bond on motor vehicles was also lifted immediately. Kamajugo yesterday explained that the genesis of the problem was the increased amount of Ugandan sugar finding its way onto the Kenya market which resulted into Kenya’s suspicion that Uganda does not have the capacity to suddenly produce extra sugar.

Gideon Badagawa, the Private Sector Foundation Uganda chief, yesterday called for negotiations at state-to-state level to avoid future occurrences because such a directive from KRA is a Kenya government policy directive which should not be allowed to continue because it hurts everybody.

URA is now preparing for a high influx of goods from Mombasa in the next few days.

In the past, such hold ups have led to online systems breakdown and clogging of cargo greatly slowing down trade and customs clearance.

Uganda is Kenya’s biggest trading partner and analysts viewed the directive that had caused bad blood as unhelpful to business and a short-sighted move.

Sources said Uganda’s ambassador to Kenya Angelina Wapakhabulo and Emmanuel Hatega from the Ugandan embassy in Nairobi also attended the negotiations alongside a Ugandan businessman based at Mombasa.

Mombasa port is the major import and export route for Ugandan goods and services.

Kenya backtracks on transit tax

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