Customs Knowledge Base

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Browsing Customs Knowledge Base by Author "Bukachi, Felix"

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    A Comparative Evaluation of the Impact of Stays of Applications and Duty Remission Schemes On Customs Revenue at KRA
    (Kenya School of Revenue Administration, 18-08-21) Bukachi, Felix; Kasibo, Abakuk; Job, Kavoya
    The East African Community (EAC) was established in 1999 and the partner states to the EAC treaty agreed to eliminate by 2010 internal tariffs based on the principle of asymmetry. The partner states also agreed to set a three-band Common External Tariff (CET) with 0% for raw materials, capital goods and agricultural inputs; 10% for intermediate goods and essential industrial inputs and 25% for finished Consumer products. The EAC Partner states including Kenya adopted the use of Stay of Application of EAC CET and Duty remission schemes as a way of protecting infant domestic industries and boosting manufacturing for export. In view of increased state revenues collection by Kenya Revenue Authority (KRA) and the ballooning government expenditure, Kenya has been operating on deficit financing which has prompted the Government of Kenya (GoK) through Treasury to opt for foreign loans borrowings to bridge the existing revenue gap. The purpose of this research was to undertake a comparative evaluation of the impact of Stay of applications and Duty remission schemes on Customs revenue at KRA. The General Equilibrium Theory of Effective Protection and Resource Allocation and the Optimal Tariff Theory are the theoretical framework that underpinned this research. The research adopted explanatory research design using quantitative approach and relied on secondary data sourced from KRA Customs department. From the findings of the simple regression analysis, it was established that both Stay of Applications of EACCET and Duty Remission Schemes accounted for Customs Revenue Collection Forgone by KRA. However, Duty Remission Schemes accounted for more variance in the forgone Customs Revenue by KRA compared to the Stay of Applications of EACCET. It was also established that for every unit increase in Stay of Applications of EACCET, there was a 14.920 Currency units increase in Customs Revenue Collection Forgone by KRA. Likewise, it was also established that for a unit increase in Duty Remission, there was a 43.829 Currency units increase in Customs Revenue Collection Forgone by KRA other factors held constant. Therefore, the study concluded that Duty remissions accounted for more variance in the Customs Revenue Collection Forgone by KRA. At the same time, increased usage of country-level deviations from the common tariff schedule through Stay of Application of EAC CET and Duty remission schemes has rendered the Common External Tariff of the Customs union less “common” negatively affecting Customs revenues. From the research findings, it was established that use of Stays of Applications EACCET’s as well as the high uptake of the Duty Remission by local entities have negative impact in terms of Customs revenue forgone. To safeguard Customs revenue, the research recommended that the GoK through its representatives in the Duty remission Committees and EAC Council should ensure that there is no double uptake of both Duty Remissions and Stays of Applications of EACCET by the same entities
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    Effect of Customs Tariffs on the Financial Performance of Textile and Apparel Firms in Kenya.
    (Kenya School of Revenue Administration, 2020) Bukachi, Felix; Gitonga, Doris; Kosgei, David
    This research sought to appraise the effect of Customs Tariffs on the financial performance of Textile and Apparel Firms in Kenya. The research employed explanatory research design and used primary data. Primary data involved the use of closed ended structured questionnaire administered through face to face interviews using five-point Likert scale. The Senior managers and finance section heads of textile and apparel firms in Kenya formed the respondents. Stratified random sampling was employed to stratify sample of senior managers and finance section heads of the respective textile and apparel firms in Kenya. Proportionate random sampling was further used to select the sample from each stratum and then convenient sampling finally employed to draw sample and collect data. Among the 170 respondents, 166 completed their questionnaires thus the study attained a response rate of 97.6%. The study employed both descriptive and inferential statistics to conduct data analysis. A multiple regression analysis was conducted on cross-section data at 5% level of significance. The study result revealed that there was a 63.9% variation in the financial performance of textile and apparel firms due to changes in the Customs Tariffs of Apparel, Fabric and Yarn. The findings also revealed that for any unit increase in the Customs Tariff of Apparel, Fabric and Yarn there was a 0.542, 0.539 and 0.112 units increase in the financial performance of Textile and Apparel firms in Kenya. Thus, the results revealed that Customs Tariff was a fundamental factor and had a positive and significant effect on the financial performance of Textile and Apparel firms in Kenya. Unique Contribution to Theory, Practice and Policy: Based on the study findings, the study recommended that the Government of Kenya (GOK) should increase the Import Tariffs of Apparel and Fabric to enable the Kenyan Textile and Apparel Firms improve their financial performance and achieve growth. The research suggest that future research can examine other cost elements and measures that affect the financial performance the Textile and Apparel firms in Kenya.