Times Tower building on 11/08/14 PHOTO: JENIPHER WACHIE
The row between Kenya Revenue Authority (KRA) and cargo agents over the renewal of operating licences enters a defining phase this week.
Under the aegis of the Kenya International Freight and Warehousing Association (KIFWA), the agents had issued a seven-day ultimatum that ends tomorrow for the unconditional renewal of their licences, failure to which they would paralyse operations from Wednesday.
Should they make good their threat to paralyse the sector’s operations, the move could cost the taxman up to Sh3billion in lost revenue.
But there is also another twist to the matter as a case filed by the more than 1,200 KIFWA members against their management board comes up for hearing today at a magistrate’s court, which had issued restraining orders barring the officials from acting for or on behalf of the association until the matter is heard and determined.
The agents have accused Auni Bhaiji, Phillip Arunga, Reuben Ndegwa, Eric Gitonga and Francis Omondi of working against their interests in agreeing to the new regulations without consulting them.
Times Tower has maintained it will not renew the customs agents’ licences for this year until they meet a raft of new regulations and fresh vetting procedures.
The lobby has, however, dismissed KRA’s assertion, claiming it was being pushed by cartels within the authority to frustrate small firms so as to push them out of business.
They further accused customs officials of favouring multi-national firms by fraudulently obtaining exemptions and direct release of their cargo to evade tax.
However, KRA maintains the agents must be vetted by April 1 as part of efforts to clean up the sector that is riddled with corruption.
The agents, however, maintain the clean-up has to begin by vetting customs officials.
The agents, during a meeting held in Nairobi a fortnight ago, appointed a nine-member task force chaired by former Nyaribari Chache legislator Chris Bichage, which has been pushing for negotiations with KRA in vain.
They have accused KRA Commissioner-General John Njiraini of protecting multinationals at the expense of small businesses, claiming he had interest in some of them, especially those angling for lucrative Standard Gauge Railway tenders.
The new KRA regulations are contained in a stakeholders bio data form, which requires agents to disclose crucial information about their business operations and clients.
Other data sought by KRA is the number of employees a firm has and whether or not it pays statutory labour contributions on their behalf such as Pay-As-You-Earn (PAYE), National Health Insurance Fund (NHIF) and National Social Security Fund (NSSF).
KIFWA membership claims the form is not an official KRA document, terming it illegitimate.
In the case filed by at least 41 KIFWA members who had gone to court seeking orders against their officials, the agents have amended their application and enjoined KRA, who they want compelled to renew their licences unconditionally.
If the court grants the order against KRA today, then the sector will breathe a sigh of relief as the boycott will be averted, albeit momentarily.
According to sections 145 and 149 of the East African Community Customs Management Act (EACCMA) and Regulation 150 of the EACCMA Regulations 2006, all validly licensed customs agents are supposed to have their licences automatically renewed annually upon application to KRA, subject to the requirements of Form C20.