Why do Kenyans Shop for Clothes in Uganda for Resale In Kenya>Customs Tax Consultant Kenya

Reason: Application of Rules of Valuation and Goods Classification

The Import duty applicable in all countries in the East African Community(EAC) is fixed. The rates for goods coming into the territory from foreign is the same. Assume the tax rates on a shirt are: Import duty, 25%, VAT,16%, IDF-3.5% RDL-2%. The overall effective rate is 50.5% {NOT 46.5%} of the Customs Value.

Therefore if Uganda accepts a customs value of Kshs 1,000,000 for a 40-foot container of shirts and Kenya uplifts it to Kshs 3,000,000
The Taxes will be Kshs 505,000 in Uganda and Kshs 1515000.
The difference in taxes is Kshs 1,010,000.

Therefore there is enough incentive to buy in Uganda, find ingenious ways of getting it back into Kenya by spending a fraction of the difference in taxes, and undercut Kenyans who paid the Kenyan Tax Rates

The point is this. The rates of import duty are the same, but the interpretation of the World Customs Organisation rules of valuation as well as the Technical understanding of goods classification is not the same for officers in the trading block. Can you uniformize human thought processes? Maybe Elon Musk can sort it out.

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Janron Consult, Tax Consultant Kenya, Customs Tax Consultant Kenya, Tax Advisory Kenya

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