Regional traders to sue Kenya over new tax

The Federation of East Africa Freight Forwarders Association (FEAFFA) has threatened to take legal action against Kenya Revenue Authority (KRA) for losses incurred following a new directive on cash bond requirement.Rwandan traders are among those whose businesses were hurt when KRA issued a cash bond requirement for transit sugar and cars exceeding 2000cc since the beginning of this month.Matthew Bizimana, the FEAFFA president told The New Times that even after the international trade standoff has been sorted out, KRA should take responsibility for the delay since the demands for the cash bonds were issued without justification.“We are taking legal action if they don’t pay all the demurrage and storage charges because this contravenes the EAC customs management act of 2006 and the Customs Union protocol,” said Bizimana. In email correspondences, copies of which The New Times obtained, Bizimana on Wednesday threatened to mobilise all Freight Forwarders Associations in the region to lay down their tools unless a decision to release the cargo without delay are taken by KRA.“The reason they give is that the cargo in form of sugar crosses to Uganda and comes back to Kenya without paying tax and we believe there is no evidence to prove this claim,” he added.“At the same time, Kenya International Freight and Warehousing Association (KIFWA) on behalf of FEAFFA should take legal action against KRA immediately,” the email reads in part.Mombasa is the shortest route for inland states that have no direct access to the sea. It has been a preferred port for many Rwandan traders because it’s less congested and ships offload faster compared to the further Dar es Salaam port.Jean Baptist Gasangwa, a Rwandan trader based in Mombasa said that following the cash bond requirement, a directive had been made that all ships carrying goods destined to Rwanda dock at the Dar es Salaam port as an alternative.In such an arrangement as demanded by KRA, it would mean that if the importer chose to re-export or redirect the car or sugar to say Dar es Salaam, it means additional freight and pay costs of changing documents to KRA.With already established mechanisms and platforms for resolving conflicts at regional level like reporting cases to the East African Court of Justice, ,not so many East Africans are aware of how the EAC treaty protects them from such unjustified economic requirements.

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Regional traders to sue Kenya over new tax