Captains of industry want overlapping cess stopped

Wednesday, February 9th, 2022 04:00 | By
Money. PHOTO/File
Money. PHOTO/File

Herald Aloo

Captains of industry have raised concern over imposition of fees and charges on traders by Kenya Revenue Authority (KRA) on behalf of the Nairobi Metropolitan Services (NMS), saying the move is counterproductive and will spike the cost of doing business.

Kenya Association of Manufacturers (KAM) says the taxman’s directive for payment of landing fees and cess to NMS-managed Nairobi County government for all livestock and livestock products delivered, even if the same has been paid in the county of origin is punitive.

“Kenya Association of Manufacturers  would like to register its concern about the landing charges unfairly imposed on livestock delivered to Nairobi County from other counties outside the NMS jurisdiction and export levy introduced in the proposed changes in food safety and export processes, through the NMS Export Certification” reads a statement by Phyllis Wakiaga, KAM chief executive.

Traders have been forced to raise prices of their livestock and livestock products to cater for the additional costs incurred, thereby increasing the cost of production for manufacturers which is consequently absorbed by the consumers.

“As we re-emerge from the disruption of the pandemic, as well as the upcoming general elections, this is the time to reassure and give confidence to investors and the business community.

Uncoordinated fees and charges, that make the business environment untenable, do the exact opposite,” said Wakiaga.

KAM believes NMS has gone beyond its jurisdiction, terming the charges illegal and punitive as it contravenes Article 209 (5) of the Constitution, which requires that taxation and other revenue-raising powers of a county not be exercised in a manner that prejudices national economic policies, economic activities across county borders, or the national mobility of goods, services, capital, or labour.

Article 209 (3) and Article 207 empowers the county governments to introduce and administer local taxes, fees, and levies but captains of industry says this move is fuelling increasing uncertainty for businesses.

“The new costs not only render the manufactured goods uncompetitive but also exacerbate an already dire situation as Kenyans try to make ends meet.

Additionally, they go against all efforts to eliminate multiple levies across counties in the agriculture value chain, as outlined in the Food Security and Nutrition Pillar of the Big 4 Agenda,” said Wakiaga.

Tax experts say the problem emanates from the lack of a clear legal framework that addresses double taxation and the trade distortions impact of landing fees across county borders.

“The problem is overlapping levies/fees when goods such animals move from one county to another. The fees are imposed in both counties hence the outcry,” says Robert Maina, tax expert at Ernst & Young.

Kenya Private Sector Alliance is already pursuing the development of a National Tax Policy and County Government Revenue Raising Process Bill to reduce multiplicity of fees, charges, and levies in counties that reduce financial baggage on Micro, Small and Medium Enterprises (MSME’s).

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