Shippers want 70% of import fee channeled to state agencies

Shippers in the East Africa region now want part of the Import Declaration Fee (IDF) channelled to state agencies that they engage with to cut multiple levies.

This comes at a time the National Treasury plans to increase IDF payable on customs value of imports from the current 2.5 per cent to three per cent, a move local manufacturers and shippers say will push up production costs.

Neighbouring countries do not charge IDF, with Tanzania having its import levy at less than two per cent, thus giving them a competitive advantage, according to the industry players.

The Shippers Council of Eastern Africa (SCEA) yesterday asked Parliament to make amendments to have at least 70 per cent of the IDF channelled towards operations at the Kenya Bureau of Standards (Kebs), Kenya Trade Network Agency (KenTrade) and Kenya Plant Health Inspectorate Service (KEPHIS).

Others are Port Health, Agriculture and Food Authority, and the Horticultural Crops Directorate.

“Parliament can make amendments directing that 70 per cent of the IDF and which would total over Sh60 billion, be provided to trade facilitation agencies and thus save the industry from the various fees and changes imposed by the said agencies for their sustenance,” SCEA acting CEO Agayo Ogambi said.

The move, he said will reduce the imposition of fees for the imported goods that are not commensurate to the services rendered.

“If this is accepted and other measures taken, costs of doing business will be reduced and competitiveness enhanced,” Ogambi said.

The Finance Bill which is before Parliament also highlights and proposes that 10 per cent of total IDF collection be used as Kenya’s contribution to the African Union and other international organisations, while 20 per cent be allocated to revenue enforcement initiatives or programmes.

To support the manufacturing and agribusiness in the country, raw materials, intermediaries, fertiliser, packaging materials and equipment, the industry had proposed that IDF be reduced to tax exempt.

Customs is the second biggest revenue source for KRA after domestic taxes, as Kenya remains a net importer. The taxman netted Sh754.1 billion in the financial year 2022-23 from customs taxes, including IDF.

IDF closed half-year to December 2023 at Sh23 billion, with an annual average of Sh45 billion.

Despite overall import values increasing by 15.3 per cent, customs taxes performance was in part affected by growth in exemptions and remissions, which grew by 39.7 per cent, driven by special exemptions accorded to rice, maize, sugar, and cooking oil.

“These products account for 24.8 per cent of exemptions accorded in the Financial Year 2022-2023. The special exemptions were part of the government’s strategies to mitigate against adverse effects of drought and to reduce the cost of living,” KRA Commissioner General Humphrey Wattanga noted.

KenTrade is among state agencies that have come under sharp under criticism for introducing fresh user fees on its platform, which importers and exporters term an additional cost.

The State agency that runs the National Electronic Single Window System, an automated platform that allows parties in trade and transport to lodge documents and seek clearance, has introduced several charges in a move to raise revenue to meet budgetary needs.

KenTrade has introduced $50 (Sh6,463) user fee for new registration applications, effective May 20. It is also charging a similar amount as annual access fee.

Users seeking to apply for lifting of a suspension have to part with $10 (Sh1,292) per request, per user with application for unique consignment reference number on the system also costing them a similar amount.

KenTrade is further charging $80 (Sh10, 340) for a notification of an impending arrival or departure of a consignment, $10 per transaction on the application of an import and export exemption and $5 (Sh646) for application of a domestic trade permit or licence.