Ugandan importers using Mombasa port have threatened to take legal action against Kenya Revenue Authority (KRA) over a directive that they deposit a cash bond equivalent to the value of imported cargo or bank guarantee before clearing their goods.
Last week, KRA directed that all transit sugar and motor vehicle imports, whose capacity exceeds 2000cc, must pay a cash bond equivalent to the value of imported cargo or bank guarantee before leaving the port of Mombasa.
However, in a letter dated September 17, 2012, Uganda's Minister of Trade, Industry and Co-operatives protested to Kenya's ministries of Trade and Industry threatening retaliatory measures against Kenyan imports to Uganda if the cash bond is not withdrawn.
"I have been informed by the Uganda business community that KRA, under notice CUS/L&A/LEG/1, has unilaterally decided on a requirement for a cash bond/bank guarantee on transit sugar and motor vehicles of 2000cc and above," said Amelia Kyambadde, Uganda's trade minister.
The letter according to the Kenya's Standard, also copied to the Uganda High Commission in Nairobi, warned that KRA's action constitutes another non-tariff barrier imposed by Kenyan authorities on its transit cargo.
It said the directive contravenes East African Community Customs Union protocol and decisions reached by the Council of Ministers in March 2012, on removal of non-trade barriers in the community.
"If Kenya needs an instrument to regulate regional trade in sugar and other products, a cash bond is not the instrument to apply," said Kyambadde.
While KRA's motive could have been to prevent dumping of transit sugar and motor vehicles destined for neighbouring countries, failure to alert the Ugandan government of the action in good time might work against it.
Although officials from Uganda Revenue Authority (URA) held closed-door meetings with KRA in Nairobi, last week, it appears a mutual solution was not found.
Clearing and forwarding agents, most of who handle transit goods, have accused a senior KRA official of skipping a crucial meeting to discuss the matter.
"We are still having a stalemate as most traders are not able to meet these new conditions imposed by KRA, especially the cash bond," said Boaz Makomere, Secretary General-Kenya International Freight and Warehousing Association (Kifwa).
While a copy of the memorandum of understanding signed between KRA and URA, seen by Business Weekly, indicates that the new KRA requirements have been suspended, the agents claimed nothing has changed.