East African Business Week

TAVETA, KENYA - Unscrupulous traders are taking advantage of the East African Community (EAC) Common Market Protocol by importing goods from outside the region, re-package and re-export them within the partner states.
Revenue Authorities in the EAC should therefore be on the lookout for such traders who are abusing the free movement of goods in the region. Free movement of goods is one of the objectives of the EAC Common Market Protocol whose implementation started a year ago. Others include free movement of services, capital and the right to establishment and of residence.
This information came to light during a tour organized by the EAC secretariat for journalists based in Arusha, Tanzania to visit three border posts to assess the implementation process of the Common Market protocol.
The tour covered the border posts of Holili and Tarakea in Tanzania, Taveta and Lokitokitok in Kenya.
Information availed to East African Business Week revealed that traders have resorted to importing goods and declaring them at the Mombasa port in Kenya or Dar es Salaam in Tanzania as goods in transit to one of the partner states.
"One of the challenges is that traders declare goods imported from outside the region at ports of entry in Mombasa and Dar es Salaam as goods in transit to a partner states and when they reach the declared destination they are repacked and re-exported to another EAC country," said the Kenya Revenue  Authority, Taveta station manager Christopher Mutaba.
 He cited an example of Kingsoft toilet papers imported from China and their declared destination as Tanzania but they are re-packed and re-exported back to Kenya.
 "Although taxes are paid at the ports of entry these goods are repacked and re-exported yet they are not supposed to enjoy the tax holiday offered under the Common Market protocol" he explained.
He explained that such goods are supposed to pay import duty of 25%, excise duty of 10% and value added tax of 18%.
He identified the other problem as conflict on who should issue certificates of origin in both Kenya and Tanzania.
"The certificates in Tanzania are issued by the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) while in Kenya they are issued by the Kenya Revenue Authority (KRA)," he said.
'We can only trust certificates of origin when they are issued by a Customs officer who we are in contact with rather than the chamber of commerce," Mutaba said.