Bakhresa Group halts flour exports to Kenya on inapt tax rules

TANZANIA – Bakhresa Group which operates one of the largest flour mill in Tanzania has suspended Kenya flour exports on changing rules and systems for exporting goods into the country.

The company said frequent changes in tax rules, instituted by the Kenya Revenue Authority (KRA) have slowed its exports to Kenya and led to losses running into millions of shillings.

According to Yasin Billo, export manager of Bakhresa Group, some of its shipments to Kenya were stuck at the border due to miscommunication and unfavourable conditions on taxes.

“The Kenya Revenue Authority (KRA) has in recent months surprised us with sudden changes that end up increasing our tax liability six fold,” he said.

“We see the hidden hand of competition in all this since our products do not encounter similar restriction in the other East Africa Community (EAC) markets that we export to.”

Mr Billo said the tax dispute has wrecked the firm’s bottom line as duty demanded per truck of goods has increased six times.

“We have decided to suspend further export of wheat flour to Kenya until the dispute is fully resolved.”

Tax dispute

The flour under Azam brand was refused unrestricted access into Kenya as per the EAC rules after KRA slapped a 25% duty on Tanzania’s products like flour.

Kenya argues that the flour is made of wheat imported under East Africa’s 10% duty remission scheme thus qualifies for the duty under EAC rules and regulations.

This was in response to Tanzania’s 25% import duty on Kenyan products, denying palm and sugar-based products such as sweets, biscuits, chocolates a free entry into the country.

Tanzania and Uganda have accused Kenya of using imported industrial sugar under a 10% duty remission scheme, thus competing at an advantage at the expense of other EAC block members.

Kenyan confectionery will not enjoy duty free rates in the Tanzanian market until the EAC forms another committee that declares their processes legitimate.

According to Tanzanian Commissioner for Customs and Excise Ben Usaje, Kenyan confectionery will not enjoy duty free rates in the Tanzanian market until the EAC forms another committee that declares their processes legitimate.