24 September 2012

Kenya: Revenue Authority Reverses Rule on Cash Bond

THE Kenya Revenue Authority has reversed its rules requiring the cash bond deposit for sugar and motor vehicles of over 2000 cc transiting through Kenya to Uganda. "In a meeting between Commissioner General John Njiraini and Her Excellency Angeline Wapakhabulo, the Uganda High Commissioner to Kenya, Commissioners of Customs Beatrice Memo and Richard Kamajugo, KRA and URA, respectively, it was agreed that the cash bond for sugar transiting through Kenya to Uganda be lifted immediately," a statement from KRA said.

The statement signed by Maureen Njongo the acting Senior Deputy Commissioner, Marketing & Communication Department said the memorandum of understanding with Uganda Revenue Authority on transit of goods through Kenya and importation of sensitive goods from Uganda was signed last week.

"It was agreed that transit sugar that has not been entered for customs clearance will be covered under a specific bond issued and guaranteed by reputable insurance companies or through bank guaranteed bonds," Njongo said. Imports of brown sugar from Uganda to Kenya, currently at various exit and entry border points between Kenya and Uganda will however be cleared subject to execution of a bank guaranteed bond to cover each shipment equivalent to duty payable at the normal common external tariff rates.

Njongo said this is a short term measure which will be reviewed within three months pending a joint verification mission by KRA and URA to be done in the next 30 days. Motor vehicles of over 2000 cc will be covered under insurance bonds from reputable companies. A directive was issued on August 29 imposing cash bonds equivalent to tax value of transit consignments if sold in Kenya, in a bid to control rampant diversion of transit goods into the Kenyan market.

Transit cargo destined for Uganda has since been piling up at the port of Mombasa as Ugandan authorities mount a spirited fight to pressure Kenya into receding the decision to impose cash bond on importers before evacuating their goods from the port. Previously KRA rules required traders to deposit non-cash insurance bonds for their transit cargo as an assurance that the goods would exit the country as planned.

The Mombasa port evacuates 1200 incoming containers and 1400 outgoing on a daily basis, 30 percent of which is transit cargo. 78.2 percent of all incoming transit cargo ends up in Uganda. Uganda is also the largest market for Kenya's processed goods and the leading trade partner, and accounts

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