Smartphone users in Kenya may have to dig deeper into their pockets as the Kenya Revenue Authority (KRA) introduces a new taxation policy for imported goods.
The policy, which took effect on June 1st, imposes taxes on each individual item in consolidated cargo, rather than the previous per-kilogram basis.
The change has caused a stir among importers and traders, who claim that it will increase the cost of doing business and affect their profit margins. Some shops have already reported running out of stock of smartphones, as they await clarification from KRA on how to comply with the new rules.
Previously, consolidated cargo was charged based on its unit weight, with a standard rate of KES 200 per kilogram. However, under the new policy, taxes will be calculated based on the unit value of each item. This means that customs officials will have to inspect and verify each item in the cargo, which could lead to delays and inefficiencies.
KRA said that the change was necessary to address the challenge of consolidating goods with diverse tax rates. For example, some traders were mixing semi-processed goods, which are taxable at 10.0%, with finished goods, taxable at 25.0%, and paying taxes based on the weight of the cargo. KRA also said that it had uncovered cases of smugglers hiding smartphones as feature phones, which are still taxed based on weight.
In a tweet, KRA explained, “KRA requires full disclosure of all cargo/items at the Ports of Entry. General goods are charged based on weight, and excisable goods are charged based on the unit value. The general Cargo/goods are currently charged customs duty at KES 270 per kg. Excisable goods i.e., Smartphones, Perfumes, cosmetics products, and electronics are charged duty based on the unit value.”
KRA advised all consolidators and importers to have commercial invoices and other relevant documents ready at the point of clearance to avoid any inconveniences.
The new taxation policy is expected to have a significant impact on smartphone prices in Kenya, as importers and traders pass on the extra costs to consumers. Smartphone users may have to brace themselves for higher prices or look for alternative sources of these gadgets.