Thursday, October 22, 2009

Letter to MG Waweru (KRA)


Dear Mr. Waweru,

Firstly, I would like to congratulate and thank you for all the good work that you have done and continue to do at KRA.

I am writing to you to seek your personal intervention in the matter of import duty and tax calculation for motor vehicles.

When one imports a motor vehicle, duty and taxes payable are calculated based upon the Current Retail Selling Price (CRSP) of the vehicle. Unfortunately, KRA does not make this information clear to importers at the outset. I have looked on the KRA website and found that the vast majority of references to Customs Value indicate CIF as the value that is used to calculate duty. I have looked at FAQ and there is only one solitary sentence here that states “The CIF is also deduced from the CRSP of the vehicle” with no further clarification of what methodology is used to do this. All other information about Customs Value, including that in the Customs Department FAQ section of the website dedicated to second hand motor vehicle import (here) refers solely to CIF as the value from which duty & taxes are calculated. Additionally, the CRSP list that KRA uses to compute duty is kept secret by KRA.

I write to you to seek your personal intervention in the following way:

To urge KRA to make ALL information (especially the full CRSP list) and methodologies relating to computation of import duties readily and easily available to the public: KRA has already taken the first step towards this by publicizing the Duty Calculation Template and making it available for free download on the site. I applaud this step and encourage KRA to go the whole way and publicize the CRSP list along with any other relevant methodologies that are used to arrive at duty figures. (For example I would suggest including another spreadsheet to enable customers to calculate how to pro rate their customs value based on engine size). I believe that KRA themselves use a series of spreadsheets to capture all this information. Why not make all this available to the public?

My reasons for making this plea are as follows:

1. Efficiency: By demystifying the duty calculation and making the process totally transparent to your customers, you empower us to offer a better service to our customers. If I as a vehicle importer have all the relevant information pertaining to duty calculation, I can quickly and easily create fairly accurate quotes for my customers. Sometimes I need to create duty quotes for potential clients of up to 20 vehicles. It becomes difficult to have to keep referring to KRA to get their estimate on each vehicle. It also wastes the time of the KRA agent. It would be immensely helpful if I (and others) could have all this information at my fingertips so that I could prepare my quotes in the shortest time possible. I would offer a better service, therefore attract more clients, import more vehicles and thereby pay more tax.

2. Eliminate Corruption: I firmly believe that in all processes, transparency helps to eliminate corruption. If it is very clear to a potential importer what import duty will be charged on his vehicle, the avenues for seeking to be corrupt are closed. I have heard of quite a few cases of people who have imported vehicles with one duty figure in mind (based on their CIF) only to be presented with a much higher figure (based on CRSP). The choices open to such a person are few especially if he does not have the extra cash for additional duty to hand. Some I have heard of have had to forfeit their investments and leave their vehicles in the port because they were unwilling/unable to pay kickbacks and were unable to raise the extra money before port charges made their undertaking unfeasible. I am sure many more take the option of paying somebody somewhere something small.

I have spoken to clearing agents, fellow importers and even people who are not directly involved with vehicle import and I have as yet not heard a single compelling reason for keeping the CRSP list and other information relevant to import duty calculations secret. I have written to KRA, called KRA, even been there in person asking the same thing: for the list to be publicized or for the reasons for sticking with this policy and all they are willing to say is that “Unfortunately the CRSP list is an internal document and cannot be publicized” or words to that effect.

I therefore seek your personal intervention to bring more transparency to the process or at least clarify what reason there is for all the secrecy that exists in this process.

It is my sincere hope that my correspondence does not cause any offence and will be taken as feedback that will contribute to a better KRA and by extension a better Kenya.

I look forward to hearing from you.

Kind Regards