KRA reclassifies duty on select imported goods to meet targets
Kenya Revenue Authority (KRA) increased import duty revenues by Sh59 billion last year by reclassifying duty charged on select imported goods such as food, drinks, tobacco and others in a move to meet revenue targets.
Imported duty collected on select imports jumped 70 per cent to Sh143 billion from Sh84 billion as the taxman reclassified duty charged on various items to hit its targets.
“The total import duty collected on selected commodities increased by 70.2 per cent from Sh 84.5 billion in 2020 to Sh143.8 billion in 2021,” Kenya National Bureau of Statistics (KNBS) data shows. For instance, duty imported juices and ingredients of ready-made juices rose from 10 per cent to 25 per cent.
Consumers of imported foodstuff, drinks and tobacco paid Sh45 billion in taxes up from Sh21 billion in 2020 and Sh25 billion in 2019.
“The import duty collected from food, drinks and tobacco more than doubled from Sh21.8 billion to Sh45.9 billion while transport equipment and metal increased by 92.8 per cent and 76.9 per cent respectively, in the review period,” data in the latest economic survey shows.
Local juice manufacturers have complained over the high cost of their ingredients, saying it is now more expensive to manufacture ready-made juices in the country. Fruit juice manufacturers rejected the KRA decision to increase import duty on products used in the manufacture of ready-to-drink juices.
They said KRA has increased duty from 10 per cent to 25 per cent, which sees consumers foot the extra costs.
Reclassification of duty charged on semi-processed products used for juice manufacturing, they said, will raise juice prices and kill the local sector.
KRA in November last year reclassified ready-to-drink juices that are manufactured locally from a lower to a higher tariff.
Total tax revenues increased from Sh1.5 trillion in the 2019/20 financial year to Sh1.8 trillion in the 2020/21 financial year. KRA had the best tax revenue targets last year. Kimani Rugendo, whose company, Kevian Kenya manufactures Pick N Peel juice said these products will still be imported into Comesa countries and come into Kenya tax-free.
The taxman is said to be setting up a digital forensic lab to help trace tax evaders and seal revenue loopholes in what appears to be full war on tax cheats.
The move by the taxman’s newly formed intelligence management division comes amid a strong shift to online transactions and electronic record-keeping by businesses as opposed to the traditional paper-based accounting systems.