Kenya Revenue Authority Loses Sh28bn To Food Tax Exemptions
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Import duty exemptions gazetted by the Treasury in December to help cool the adverse effects of drought on the cost of basic food items, saw the Kenya Revenue Authority take a Sh28.1 billion hit in customs duty collections.
Customs duty, which has traditionally been delivering surplus collection, missed its target for the financial year 2022/23 by Sh27.4 billion after registering Sh754.0 billion in the period ended June 30, 2023.
In 2021/22, customs posted Sh728.5 billion in collections surpassing its target by Sh25.7 billion.
The KRA says the exemptions were at the heart of the underperformance by customs. On December 23, 2022, Treasury CS Njuguna Ndung’u, gazetted duty-free importation of 100,000 tonnes of sugar until March 31, 2023, as well as dutyfree import of 900,000 tonnes of maize and 600,000 tonnes of milled rice between February 1 and August 6, 2023.
“Customs historically always met and surpassed its targets and we expected the same for 2022/23. The key thing is that when the country suffered drought at the start of the year, there was a policy imperative to cushion Kenyans from hunger and this resulted in huge exemptions being gazetted on certain products,” KRA’s acting commissioner general Rispah Simiyu says.
“Import duty exemptions on rice, sugar, maize, cooking oil, yellow maize and fertiliser amounted to Sh27.1 billion. From a Value Added Tax standpoint, it was Sh960.0 million foregone. Other exemptions amounted to Sh87.9 billion and all this had a direct hit on the customs numbers.”
The taxman has cited challenges in importation due to dollar scarcity prior to the government-to-government petroleum products importation deal as another reason. On March 13, Kenya entered a deal with Saudi Aramco and Adnoc to supply the product on credit in a bid to address the monthly US$ 500 million (Sh70.9 billion) demand by oil marketers.
source: Business Dailly
