Flower sector crisis over lack of import duty forms

July 27, 2013
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Kenya Flower Council  CDO Jane Ngige estimates the sector will lose Sh4.5b monthly if the crisis is not resolved/FILE
Kenya Flower Council CDO Jane Ngige estimates the sector will lose Sh4.5b monthly if the crisis is not resolved/FILE
NAIROBI, Kenya Jul 27 – The Kenya flower sector is set to lose billions of shillings in foreign export income following failure by the Kenya Revenue Authority (KRA) to issue exporters with the Euro 1 and GSP forms used for exemption of import duty.

Kenya Flower Council (KFC) Chief Executive Officer Jane Ngige estimates that the sector stands to lose approximately Sh4.5 billion monthly if the crisis is not resolved fast.

On Friday, exporters said they had run out of the vital documents without which the country’s flowers will be subjected to import duty.

Ngige says KRA is the only organisation in Kenya mandated to issue the exporters with the Euro Form and that failure has created apprehension among flower farmers and exporters.

“The forms are used to determine the origin of goods to prove that the importing country has a bilateral agreement that allows duty-free entry into the receiving country,” Ngige explained.

Exporters say shipping flowers has become a nightmare since KRA has not explained why the forms are not available or when they will solve the problem.

“Last week, Kenya was told enough is enough to a gentleman agreement that has been working for the past two years where exporters and their agents agree to sidestep the requirement with promises that the problem was temporary, and henceforth, the forms must be produced. When it became apparent that the forms were not coming any time soon, the doors have been shut plunging the industry into a crisis,” she said.

KFC on Friday wrote to the KRA demanding immediate action or compensation for the losses but by close of business, no response had been forthcoming.

Ngige said that KRA has shifted the blame to the government printer saying that they were unable to meet the demand for the number of forms required to clear the consignments.

“Today I realised we cannot export the flowers to some specific European destinations and on seeking an explanation from KRA, they said the government printer is unable to meet the demand of the bulk of the papers needed on a daily basis to facilitate the smooth export of flowers,” she says.

Kenya is the world’s third-largest flower producer and exports 500 tonnes of flowers every day accounting for nearly half of the country’s horticulture export earnings.

In view of failures to meet the buyers demand, the Kenya flower exporters will not only be risking loss of revenue but the buyers will be forced to look for alternative suppliers to meet their demands.

“If Kenya cannot supply the flowers, the buyers will be forced to source the product from elsewhere thereby denying the government a lot of revenue besides putting the livelihoods of more than two million people depending on the sector on the line,” she says.

Earlier on KRA was accused by flowers farmers of failure to pay billions of shillings in Value Added Tax (VAT) refunds.

As at last year the flower farms were demanding a total of Sh2 billion in tax refund with some of them taking the matter to court.

However, Ngige says that KRA has heeded to the cry by the flower farmers and has been gradually paying what it owes to the farmers.

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