Uganda imposed tax on Kenya-made sweets

Kenya has given its neighbours Uganda and Tanzania one more month to lift an embargo on duty-free entry of Kenya-made sweets or face retaliatory action from July 1, when new the financial year 2018/19 begins in the East African Community (EAC) bloc.

Uganda and Tanzania in March this year imposed a 25 percent import duty on Kenyan confectionery, juice, ice cream and chewing gum earlier in the year on grounds that makers were using zero-rated industrial sugar imports.
The two countries rejected certificates of origin issued by the Kenya Revenue Authority (KRA) and opted to levy the import duty on the confectioneries.
Acceptance of the certificate, a document showing where a good has originated so as to determine the import duty chargeable — guarantees goods to enter tax-free into partner states of the EAC as outlined in EAC Common Market Protocol.
Sources say revenue and standards bodies from both countries will separately visit Kenyan factories from June 11 for verification in a bid to resolve the embargo.

Sources say Kenya will make a decision by June 30 and communication will be made by the EAC secretariat on the findings of that verification.

The verification process, to be supervised by the EAC’s secretariat, will extend to factories making other products such as cement, lubricants, cosmetics and wooden pallets which have also had difficulties gaining free access into Tanzania.
Uganda and Tanzania revenue authorities accuse the Kenyan manufacturers of tilting competition in their favour by using industrial sugar imported under a 10 percent duty remission scheme.
The region does not produce industrial sugar. In April, Kenyan firms accused Uganda and Tanzania of using the customs taxes to restrict trade in the EAC.
The two countries have lists of Kenyan products they suspect do not meet the rules of origin, which forms the basis for qualification for duty-free market access within EAC under the common market protocol of July 2010.

Official statistics show Kenya’s exports to Uganda fell 9.52 per cent to Sh12.92 billion in the first three months of the year 2018 compared to last year, while Tanzania’s rose 20.37 percent to nearly Sh6.01 billion.

According to sources, officials will investigate availability of stocks of duty-free raw sugar shipped into the country under the one-year zero-rate duty remission scheme that Kenya sought from the EAC secretariat last July.

Reduced sugar production in the region as a result of a recent prolonged drought, allowed importation of raw sugar at zero tax.