Kenyan businesses engaged in cross-border trade within the East African Community (EAC) risk penalties and legal complications if they fail to cancel customs bonds promptly after meeting the required conditions.

Customs bonds, and financial guarantees provided to the Kenya Revenue Authority (KRA), ensure the payment of duties and taxes.

They are required in scenarios such as transporting goods in transit, clearing perishable items quickly, managing temporary imports, or complying with customs incentives like duty exemptions.

These bonds are classified into general bonds, which cover multiple transactions over a period, and particular bonds, issued for specific transactions.

Once the purpose of a bond is fulfilled—whether through proof of goods crossing borders, filing necessary documentation, or confirming the goods’ re-export or local use—the bond must be cancelled to avoid penalties.

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According to cases presented before the Tax Appeals Tribunal, expired bonds that remain uncancelled can lead to disputes and enforcement actions by the KRA.

PwC, a professional services firm, advises businesses to maintain accurate records, including customs entries, bond documents, exemption letters, and exit notes, as these are required for bond cancellation.

“These documents serve as crucial evidence of compliance and are typically required by the KRA for bond cancellation,” the firm stated.

Timely cancellation of bonds helps businesses avoid fines and unnecessary complications, ensuring smoother trade operations across the EAC.

Businesses are advised to act proactively and ensure all bond conditions are fulfilled and recorded accurately to prevent disputes with tax authorities.