Traders were relieved after Kenya Revenue Authority lifted restrictions on warehousing of goods in customs bonded warehouses imposed last year.

The move cushions businesses that leverage customs bonded warehouses to store goods, defer payment of duties, and enhance regional trade.

Through a Gazette Notice No. 3738 dated April 15 the Commissioner of Customs and Border Control, Kenya Revenue Authority notified the public of the revocation of GN no. 3530 of 13 May 2020 which restricted certain goods from bonded warehousing.

Trade experts at PWC say businesses can now re-evaluate their supply chain arrangements in light of the revocation of Gazette Notice No. 3530 and take advantage of the potential gains of bonded warehouse facilities.

Policy shift

The goods that could no longer be warehoused included amongst others foodstuffs in any form, fresh or preserved, including bulk commodities, except where these are used as ship stores and in duty-free shops.

Others were denatured and undernatured spirits, new and used spares for motor vehicles, tyres for motor vehicles and motorcycles, wines, spirits, and other alcoholic beverages.

Maurice Mwaniki, Indirect Taxes Associate Director at PwC Kenya, said the policy shift will help revive the economy amid the Covid-19 pandemic by improving cash flow.

“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.”

Adverse effects

While the decision to lift the restriction is positive, Mwaniki said the initial decision made in May 2020 to stop warehousing of goods in bonded caught many investors by surprise.

 The decision 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, PWC said tax policymakers needed to ensure tax laws are not changed frequently as the lack of consistency results in a significant adverse impact on businesses.

Such goods may be warehoused in a government warehouse or a bonded Warehouse whether general or private,  commonly referred to as customs bonded warehouses.