Cost of doing business about to go up

bigDog said:
Isn't the government not offering credit by postponing your tax payment due date?
Click to expand...

No they are not. You still don't have the goods in your hands. They are in a bonded warehouse. You cannot access the goods until you pay tax.
 
Okiya said:
No they are not. You still don't have the goods in your hands. They are in a bonded warehouse. You cannot access the goods until you pay tax.
Click to expand...

So you are liable for everything including insurance but not tax? Yet insurance is taxable.
 
Okiya said:
No they are not. You still don't have the goods in your hands. They are in a bonded warehouse. You cannot access the goods until you pay tax.
Click to expand...

Why can't you make your processes more efficient to reduce warehousing costs?
 
bigDog said:
So you are liable for everything including insurance but not tax? Yet insurance is taxable.
Click to expand...

Yes. Until you access the goods you don't pay any taxes. It's a concept used world over. In US you can have your goods for up to 5 years in bonded warehouses without paying any tax.

So if we revisit the query you raised about cashflows, current assets and credit, you can see why it was irrelevant.
 
bigDog said:
As usual, you are avoiding the question. What happens when you have bloated current assets? How much long term capital can you allow a business to hold in current assets?

I gave you an example that I will repeat, would you extend me 90 days credit for fish fillet that you buy on cash basis? Would i pay the same price as your cash customers ?

While answering these questions, can you also say what you understand by the concept of "Time value of Money"?
Click to expand...

So let me answer your questions that I was avoiding because I felt you didn't understand how custom bonded warehouses work:

1. What happens when you have bloated current assets?- That's the importers problem. Not KRA's problem
2. Would you extend me 90 days credit for fish fillet - There is no credit involved in this problem situation. Like I mentioned, the goods have not yet entered the Kenyan market. So why should KRA demand tax for them? Does KRA demand VAT for goods in supermarket that are yet to be solved?
3. Time value of Money- That's the suppliers problem. Not KRA's problem
 
Okiya said:
So let me answer your questions that I was avoiding because I felt you didn't understand how custom bonded warehouses work:

1. What happens when you have bloated current assets?- That's the importers problem. Not KRA's problem
2. Would you extend me 90 days credit for fish fillet - There is no credit involved in this problem situation. Like I mentioned, the goods have not yet entered the Kenyan market. So why should KRA demand tax for them? Does KRA demand VAT for goods in supermarket that are yet to be solved?
3. Time value of Money- That's the suppliers problem. Not KRA's problem
Click to expand...

I concede. KRA has no business taxing goods that have not been floated to the market. It would be like asking EABL to pay tax as soon as a bear is put in its warehouse as opposed to paying taxes due when the beer leaves for the distributors warehouse.

Your argument makes sense and I have learnt something new.
 
Many policies made by kibaki regime are being thrown out without care, forgetting that kibaki was an economist with vast experience while some of them were still in their diapers. The fact is since this regime came into power the cost of doing business has really gone up and the general business environment has been hostile. Now, @Field Marshal if you think am whining just look at the number of IPOs from 2013 to date and those from 2003 to 2013. Tunarudi nyuma ama tunaendelea mbele. A friendly Business environment is very key to a vibrant economy.
 
mr ShairMan said:
Many policies made by kibaki regime are being thrown out without care, forgetting that kibaki was an economist with vast experience while some of them were still in their diapers. The fact is since this regime came into power the cost of doing business has really gone up and the general business environment has been hostile. Now, @Field Marshal if you think am whining just look at the number of IPOs from 2013 to date and those from 2003 to 2013. Tunarudi nyuma ama tunaendelea mbele. A friendly Business environment is very key to a vibrant economy.
Click to expand...
Chief the current government is not made up of real capitalists but economic thugs. How do you expect them to think from a business perspective?
 
Ole masai said:
Small traders utilise cargo consolidation where tax is paid upfront. Bonded warehouse are for big business using formal importation channels.
Click to expand...

There are a number of small traders who buy their goods locally e.g. spares and tyre retailers. These costs or supply chain inefficiencies will be passed to them.
 
You must log in or register to reply here.
Back
Top