Couriers want low value goods exempt from indirect taxes

August 5, 2014
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What should be a cheap thing to buy is going to be three or five times more expensive, according to DHL Express Kenya Country Manager Alan Cassels/FILE
What should be a cheap thing to buy is going to be three or five times more expensive, according to DHL Express Kenya Country Manager Alan Cassels/FILE
NAIROBI, Kenya, Aug 5 – In Kenya if you have to import something valued at $35 (Sh3,078) you will have to pay a government fee of Sh5,000, Kenya Bureau of Standards (KEBS) fee which is at 15 percent of the value of the goods, railway levy of 1.5 percent of the goods, plus duty, VAT and transportation costs.

What should be a cheap thing to buy is going to be three or five times more expensive, according to DHL Express Kenya Country Manager Alan Cassels.

Cassels who also chairs the Courier Industry Association of Kenya (CIAK) International Subcommittee says the practice is inhibiting the growth of international e-commerce in the country.

The association is urging the government to implement a formal De Minimis threshold on imports in Kenya where merchandise of low value is exempt from indirect taxes that include Customs duty, VAT and sales taxes.

“If the government would set a formal De Minimis Level, of even if it were $50(Sh4, 392) then goods worth $50 and below would come through without going through the formal customs clearance making it easier for Small and Medium Enterprises (SMEs) to do business,” he said in an interview with Capital FM Business.

Cassels says the exemption will speed up the process of clearance of goods through custom service and facilitate the growth of international electronic commerce.

“The wonderful thing about e-commerce is that you can buy anything from any country in the world and sure you’re going to have to pay the transportation costs for it to get here but for small items many things on E- commerce are small items like books, CDs, DVDs, without the De Minimis level it makes it prohibitively expensive and so consequently e-commerce in Kenya is not growing as it should,” he said.

The association has already kick-started lobbying for introduction of the De-Minimis Level in Kenya.

“We have already written to the National Treasury Principal Secretary Kamau Thugge on the issue,” he said.

The association is also concerned that the Kenya Bureau of Standards (KEBS) recently raised its fees from 2.25 percent of the value of the goods to 15 percent.

“KEBS raised its fees without any notification which has raised concern to our customers and making it difficult to do business, “he said.

He said that there is a lot of demand on E-Commerce in the country but the regulations are inhibiting the growth.

Angola has the highest De Minimis level in Africa that is at $370 (Sh32,541) while United States is at $200 (Sh17,590) In Australia, imported goods start attracting taxes when they exceed $1000 (Sh87,950).

Imports in Kenya decreased to Sh113.6 million in June of 2014 from Sh150.4 million in May of 2014.

Kenya imports mostly machinery and transportation equipment, petroleum products, motor vehicles, iron and steel, resins and plastics.

Kenya’s main import partners are India, China, United Arab Emirates (UAE), South Africa, Saudi Arabia, United States and Japan.

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