Economy
Audit backs rule on quality checks per product small traders import
Monday November 13 2023
Cabinet Secretary for Investments, Trade and Industry Rebecca Miano during the interview at her office in Nairobi on October 24, 2023. PHOTO | LUCY WANJIRU | NMG
An audit by the Trade Ministry has backed rules allowing the Kenya Bureau of Standards (Kebs) to approve the quality of every item small traders import.
The ministry said a regulatory impact assessment for the Import Cargo Consolidation Regulations 2023 reveals cost and efficiency benefits.
Read: Small traders spared VAT obligations
“In view of the above, the regulatory impact assessment concludes that the intended regulations are necessary for the proper implementation of Section 14C of the Act. It is, therefore, recommended that the Draft Standards (Import Cargo Consolidation) Regulations, 2023 be adopted,” it said in a newly published audit report.
The Kebs rules require that each imported product be subjected to inspection although consolidated cargo poses difficulty in having each product subjected to verification owing to frequent mis-declaration.
The proposed regulations are intended to cure the problem by requiring a master packing list disclosing the content of every consignment.
Apart from the Kebs, the Kenya Revenue Authority (KRA) is also implementing a new law on consolidated cargo, which allows it to open containers and compute taxes per item imported — in a strategy aimed at curbing tax evasion.
Taxes on consolidated cargo had for a while been paid per kilogramme, creating an opportunity for mis-invoicing through which the State has been losing billions of shillings in revenues.
With trade mis-invoicing, importers under-declare the price of an imported item, a practice that is common with the consolidation of imported goods. Different small-scale traders who deal in items such as mobile phones, laptops, toys, or second-hand clothes have long been imported through a cargo consolidator.
Under the new KRA rules, as soon as the cargo reaches the country, the consolidator will be required to unbundle it and allow for individual clearance.
Items imported by small traders now attract import duties, value-added tax, excise duty, import declaration levy, and Railway Development Levy.
This has increased the cost of consolidated cargo, which previously attracted a duty of Sh200 per kilogramme for air cargo or Sh2.2 million for a 40-foot container brought in through the sea.
Consolidators were charging traders Sh 1,063.57 ($7) for a kilo of cargo transported through the air and Sh 759.82 ($5) shipped by sea.
Read: KRA to tax small traders per product
Before de-consolidation, for example, traders would pay the same tax rates for smartphone brands of iPhone and Redmi.
But with the new requirement that taxes be paid per value of the item, importers are paying more for the more expensive iPhone.
