Kenya to set up additional tax points along Ethiopia border

Kenya is set on establishing additional One Stop Border Posts (OSBPs) along its border with Ethiopia as part of the State measures to rope in additional revenues from the thriving trade between the pair.

Even so, the government has highlighted the under-utilization of the current border post in Moyale town pointing to the overwhelming evidence of tax evasion through the smuggling of goods.

“We should see more trade volumes passing through the OSBP at Moyale- an indication of a robust business activity between Kenya and Ethiopia. Unfortunately, we are not witnessing this,” noted Acting National Treasury Cabinet Secretary Ukur Yatani during his tour of Moyale over the weekend.

The visiting Cabinet Secretary further directed the Kenya Revenue Authority (KRA) to convene regular multi-agency meetings with residents to underpin the importance of taxation and its subsequent compliance.

“This will also ensure that any misunderstandings that may be existing between KRA and stakeholders are solved amicably hence boosting compliance and resulting to more revenue for the government,” he added.

The additional border post sits along the State’s quest to smoothen the agreement on free trade between Kenya and Ethiopia.

Trade between the two Common Market for Eastern and Southern Africa (COMESA) members has despite bilateral agreements remained in the woods, dogged by persistent challenges including smuggling and non-tariff barriers.

Nevertheless, the fruition of trade between the pair remains potent supported largely by the ongoing liberation of relations in Africa’s second most populous nation under Prime Minister Abiy Ahmed.

Under his watch, Ethiopia has begun to open up its domestic market to foreign firms.

The highest proportion of liberalization to date has taken place in the country’s finance and insurance sector. As a result Kenya’s largest banks Equity and KCB have set up representative offices in Addis Ababa ahead of a possible start to operations.

Currently, the balance of trade between Kenya and Ethiopia is tilted towards Kenya in spite of Ethiopia’s registry of greater exports into the country in recent years than the vice-versa.

According to data from the Kenya National Bureau of Statistics (KNBS) total exports to Ethiopia from Kenya in 2018 were valued at Ksh.6.3 billion while on the reverse, imports were valued at a lesser Ksh.959.1 million over the period.

On the contrary, the value of Kenyan exports to Ethiopia has fallen by 8.7 percent across five years while imports have picked up nearly two and a half times in value over the same window.