Kenya Revenue Authority to lift restrictions on warehousing of goods in Customs bonded warehouses imposed by Customs in May 2020.
The policy shift by the government is a welcome relief for businesses that utilize customs bonded warehouses to store goods, defer payment of duties and are involved in regional trade. This decision was communicated through Gazette Notice no. 3738 dated 15 April 2021.
“We expect that with Customs having lifted restrictions on warehousing of goods will help contribute to the Government’s agenda of reviving the economy in light of the ravages of the Covid-19 pandemic, improve cash flow and stock management for businesses,” commented Maurice Mwaniki, Indirect Taxes Associate Director at PwC Kenya.
“Furthermore, we expect this will once again enhance the competitiveness of Kenya as a global and regional logistics hub; and will assist attract inward investment into Kenya and the wider East African region,” concluded Maurice Mwaniki.
Need for consistency in tax law
Whilst the decision to lift the restriction is positive, it is important to note that the initial decision made in May 2020 to stop warehousing of goods in bonded caught many investors by surprise. This forced many businesses to re-evaluate whether they would continue serving their customers across the region from Kenya. As a result, it is likely this cost Kenya business opportunities.
Given the challenges currently facing businesses, it is imperative for tax policymakers to ensure tax laws are not changed frequently as the lack of consistency results into significant adverse impact to businesses.
Warehousing of goods is not unique to Kenya
Businesses world over rely on bonded warehousing to manage cashflow and secure global supply chains. By allowing businesses to warehouse goods without payment of duties makes countries competitive and more attractive to investors who are looking at Kenya as their preferred base for regional trade. The move by the Government of Kenya fits in well into the government’s agenda of developing infrastructure to make Kenya a global and regional logistics hub.