Seth Onyango and Alvin Mwangi @PeopleDailyKe
Manufacturers of confectionery products have been caught up in the ongoing war on contraband sugar in what could lead to loss of sales running into millions of shillings.
Already, Uganda and Tanzania have imposed taxes on sugar-based products like biscuits, chocolate and sweets from Kenya citing use of imported duty-free industrial sugar.
While imposing restrictions, the two countries accused Kenyan firms of using duty-free sugar in production to tilt competition in their favour against their East African peers. Subsequently, they have instituted a 25 per cent import duty on Kenyan confectionery.
Kenya Association of Manufacturers (KAM) chair Flora Mutahi yesterday confirmed firms have had difficulties exporting the products.
“In the past three months we have had difficulties trading sugar-based products with Tanzania and Uganda due to a misinterpretation of Gazette Notice 4536 which was issued to combat the effects of drought and famine in the country,” Mutahi said.
Sugar-based products made in Kenya are manufactured using industrial sugar imported under the East African Community duty remission which attracts a payable rate of 10 per cent duty.
EAC duty remission scheme requires manufacturers to secure advance approval from the regulators, for each consignment, on price, quality, origin and volume.
However, the gazette notice by Treasury Cabinet Secretary Henry Rotich allowing the importation of table sugar to plug the domestic shortfall seemed to have complicated matters for manufacturers.
According to Mutahi, the window which was to allow importation of table sugar was interpreted to include industrial sugar as well.
She made the remarks a day after a officials from Tanzania and Uganda revenue authorities visited Nairobi to ascertain if Kenya had breached the duty remission scheme.
“Allegations that manufacturers have been illegally importing sugar for production are unfounded, negligent and false. Allegations that we imported table sugar are unfair to manufacturers. They did not import table sugar during the duty free window last year,” Mutahi said.
Kenya Revenue Authority (KRA) has also dismissed the duty-free importation claims as it defended local firms saying confectionery products made of industrial sugar imported under the EAC duty remission scheme should not be subjected to customs taxes.
Kenafric Industries chairman Bharat Shah asked those accusing manufacturers of evading taxation to seek clarification from KRA. “There is a long procedure which we always have to follow before importing sugar,” Shah said. According to KRA, the clearing process of imported sugar consignment is done subject to physical confirmation of the arrival and presence of the sugar at the port of Mombasa or any other designated port.
All importers must to adhere to the quality standards of the imports as set out by the Kenya Bureau of Standards. Wrong declaration is penalised and any duty free facility withdrawn from the importer.