Treasury Cabinet Secretary Ukur Yatani has revoked the controversial new tax on imported shoes, bringing relief for traders.
Yatani, in a letter to the Kenya Revenue Authority (KRA), suspended the new tax which required traders to pay a tax of up to Ksh164.4 ($1.5 ) per pair of shoes imported into the country.
The intervention came after Interior CS Fred Matiang'i had personally vowed to ensure a reduction in taxes following a meeting between Kamukunji traders and KRA on Monday, August 16,
Shoe importers had since July 1 started paying the new fee at the rate of Ksh164 ($1.5) per pair for leather shoes and Ksh109 ($1) per pair for sports shoes.
Also, the new tax was requiring the importers to pay an extremely high duty of almost Ksh5 million per 40-foot container.
The Treasury CS reverted it to the older tax of 25 percent per shipment that saw importers pay Ksh2 million per 40-foot container of footwear.
The importers had protested over the new tax saying that it had increased import duty for a 40-feet container to Ksh8 million from Ksh2 million.
“After due consideration of the matter, the National Treasury has decided to revoke the specific rates of duty on imported shoes and apply the applicable Common External Tariff rate of 25 percent,” Yatani stated in the August 16 letter to KRA Commissioner-General Githii Mburu.
“In the meantime, KRA should allow importers to pay import taxes, levies, and fees amounting to Ksh2 million per a 40-feet container up to August 31, 2021," he stated in the letter.
Yatani’s move to suspend implementation of the new tax came days after the Senate demanded an explanation from the KRA of what appeared to be double taxation and recommended investigation by the relevant House Committee.
In the letter to the KRA, the Treasury said it would pay the deficit where the application of the Ksh2 million duty per 40-foot container leads to a deficit.
The new tax was approved by the EAC Council of Ministers in May and gazetted on June 30, 2021, paving the way for their collection from the start of last month.
The Senate noted that while the new tariff was to be implemented by all six EAC states, only the KRA had implemented it, making local importers lose to their regional counterparts.
