A section of Kenya’s clearing and forwarding fraternity has warned of massive job losses and lower tax collection if the single customs territory is fully implemented in East Africa.
While the East African Community is moving fast towards full integration, issues have arisen on how some of the protocols are being implemented, including the single customers territory.
Under the deal, Kenya will create space for its partners to set up customs clearing units. The agents reckon that the deal, which involves shifting customs operations from Rwanda to the ports of Mombasa, and Dar es Salaam, will lead to unemployment, revenue loss and adverse multiplier effects.
“Giving other member countries of the East African Community (EAC) express authority to enter goods through their systems with their own customs agents generating the documentation is not only risky for Kenya but also gives undue advantage to the agents in the import countries to take all business at will,” said Keynote Logistics Limited MD William Ojonyo.
Under the single customs territory arrangement, the EAC member states will adopt a destination model of goods clearance, where assessment and collection of revenue is to be done at the first point of entry.
This has already started in Kenya, Rwanda and Uganda after a previous meeting at Entebbe by the three Heads of State.
It allows free circulation of goods in the single market with variations to accommodate goods exported from one partner State to another. However, customs administrations at destination states retain control over assessment of taxes.
“The immediate consequence of the single customs territory is that over 60 per cent of business initially done by the Kenyan agents has been taken over by agents of the importing countries. This has driven thousands out of employment in the affected companies,” said Ojonyo.
Kenya is also losing on tax collection since most traders are opting to register companies in Uganda and pay less taxes in Uganda to have the same goods find their way back to the country at better prices, thus pushing the competition out of business.
Source: Standard Digital