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Kenya extends freeze on new cereals import tax amid protest
In a notice issued by AFA in May, the government had also slapped a two percent levy on the customs value of imports of legumes and pulses including beans, lentils, soybeans, and peanuts.
Kenya has extended a freeze on a two percent levy on imports of cereals including maize, rice, and wheat from East African Community (EAC) member states amid a fallout with traders.
Agriculture Food Authority (AFA) Director-General Bruno Linyiru said the freeze on the levy will be in place for a month to allow the regulator to address concerns raised by traders who were opposed to the tax.
“We have suspended the levy for traders within EAC member states for one month. We want to address all the issues they raided first,” said Mr Linyiru in a phone interview on Tuesday.
The State also imposed a one percent levy on the import of roots and tubers such as potatoes, cassava, sweet potatoes, and yams. The levies were initially scheduled to take effect on July 1, 2024 but this was later pushed to August 12,2024.
Traders that failed to pay the levy were to face an interest rate of 25 percent on the outstanding amount for the first month in which the trader defaulted.
Therefore, the traders will be charged a compound interest of 12 percent on the outstanding arrears.
However, a standoff ensued last Monday at Kenya’s border with Tanzania, as traders refused to pay the newly introduced two percent levy on the customs value of cereals and legumes, which would see them fork out an extra Sh20,000 on a truck of maize and Sh50,000 on a truck of rice, on top of other charges they have been paying to different government agencies.
The boycott caused a blockade of more than 40 trucks carrying rice and maize from Arusha, until the government backed down and allowed the products in without paying the levy. Spooked by the standoff, AFA suspended the start of the levies to allow for talks with traders. The Tuesday meeting with traders saw the start of the new levy suspended for a month.
According to the traders, AFA wanted to start charging the two percent levy on imports of cereals and legumes from August 12, after it issued a notice in June, on planned imposition of levy on imports and exports of all food crop imports and exports.
“For example, if I have a truck carrying rice from Tanzania worth Sh2.5 million and AFA adds a new levy of two percent on custom value, that is around Sh50,000. Really, what is this for Kenyan business people?” posed a trader who spoke to Business Daily last week.
But AFA maintained that the new levy is “a mandatory payment that affected entities must make, except in cases where exemptions are granted.”
AFA says proceeds of the new levy, which it was estimating to hit Sh800 million by the end of the 2024/25 financial year are intended to be used in “the operations of the Authority, development of the food crops subsector; and such other purpose as may be approved by the Authority.
The new levy is on top of other charges that traders have been paying to AFA and other government agencies such as the Kenya Plant Health Inspectorate Service (Kephis) and Kenya Bureau of Standards (Kebs).
The charges include a Sh3,000 AFA permit to import cereals and legumes, a Sh600 import permit charge and Sh7,500 inspection fees to Kephis, Sh1,100 port health charge, Sh1,100 biosafety charges and Sh7,200 to Kebs for moisture and aflatoxin tests.
