In an effort to ensure full disclosure of cargo and items at the Ports of Entry, the Kenya Revenue Authority (KRA) has implemented new regulations requiring all goods to be declared and charged customs duty accordingly.
The new policy, effective immediately, has both importers and retailers on their toes as it involves customs duty calculations based on weight for general goods and unit value for excisable goods.
Acting Commissioner-General Rispah Simiyu announced the policy shift, highlighting the need for accurate declarations and compliance.
Speaking about the implications of the revised customs duties, Simiyu explained, "The general Cargo/goods are currently charged customs duty at Sh270 per kg. Excisable goods, such as Smartphones, Perfumes, cosmetics products, and electronics, are charged duty based on the unit value."
The repercussions of this stringent approach were recently demonstrated when an item with a declared value of approximately Sh85,000 underwent 100 per cent verification, leading to an unexpected additional duty payment of approximately Sh700,000, as revealed by Simiyu.
Read More
The customs duty restructuring is not without its challenges. The declining value of the Kenyan shilling, which reached a low of Sh141.59 against the US dollar, has further complicated matters for dealers who are now forced to pay more for smartphone orders.
As a consequence, smartphone prices have witnessed sharp increases across different categories, impacting both retailers and consumers.
Mildred Agoya, the Public Relations Manager at Realme Kenya, elaborated that prices have surged significantly from the dealers' end, varying across phone categories such as low-end, middle-level, and high-end.
"The result is that prices have increased sharply from the dealers' side depending on the category of the phones (low end, middle level, or high end). You find that some phones that we were selling at Sh9,999 are now going for Sh12,000," Agoya explained.
The rising costs have created a supply crisis in gadget stores, with many retailers struggling to restock due to the prohibitive prices. Ongoing demonstrations have further exacerbated the situation, instilling fear in smartphone sellers who are wary of potential looting incidents.
As a result, only shops with sufficient stocked inventory continue to operate, while others remain cautious, stocking limited quantities of phones.
In response to the unfolding challenges, KRA urged all consolidators and importers to be well-prepared during the clearance process.
"We encourage all consolidators and importers to have commercial invoices and any other ownership documents at hand at the point of clearance," the authority said.
The implementation of the full disclosure requirement at the Ports of Entry is poised to have lasting implications on trade, import, and retail sectors in Kenya.
The policy aims to boost revenue collection and instil transparency in cargo clearance, but it also presents short-term hurdles for businesses adapting to the new customs duty calculations.
As the situation unfolds, stakeholders in the trade industry remain watchful, with retailers and importers navigating through the changing landscape of import duties, hoping for a smooth transition that will eventually benefit all parties involved.
