{{Manufacturers in Kenya are fighting to save a multi billion (Kenya Sh114 billion) regional export business as Uganda and Tanzania increasingly charge full duty on imports from Kenya.}}
Businessdaily reports that arbitrary protectionist measures are undermining the East African Common Market forcing the Kenya Association of Manufacturers to seek an urgent meeting with the Treasury and the Trade ministry.
Kenya Association of Manufacturers (KAM) officials said 95% of the companies under its wings had been affected. The lobby brings together 750 manufacturers classified under 14 sectors.
In some cases, Kenyan companies exporting under the duty remission scheme— where companies are allowed to import inputs without paying full tax — are facing demands of backdated taxes of up to five years.
Under new regulations ratified by the EAC that KAM wants suspended, manufacturers using imported input can only export outside EAC or pay full duty as opposed to the rules of origin scheme (demanding at least 35% value addition) where tax is paid on imported raw materials.
KAM says the countries have extended this treatment to even minimal imported input:
“In some cases, producers use minimal imported content on remission and are still subjected to full payment of duty on the final product.
We believe that the content imported under remission should be put into consideration when determining when duty is payable on the finished product.”
But the government says the EAC decision to restrict duty remission goods to exports outside EAC borders — with only 20% allowed into the block —was informed by logistical issues.
Director of economic affairs Richard Sindiga says even the minimal input has major implications.
“A firm which wants to sell in East Africa has to pay full duty because it is administratively expensive for countries to audit factories for compliance on input,” said Mr Sindiga.
He adds that firms exporting under the rules of origin scheme have not been affected, which some manufacturers contest.
The official said EAC is carrying out a study on duty remission that he urges KAM to participate in.
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