The Kenya Revenue Authority (KRA) is dedicated to fostering tax compliance and enhancing revenue collection as part of its commitment to national development. To this end, KRA, in collaboration with the Communications Authority (CA), is implementing a Mobile Device Declaration System under its Enterprise API Integration (EAPI) project. This initiative ensures proper tax declaration, payment, and verification for mobile devices imported into or assembled within Kenya by using IMEI (International Mobile Equipment Identity) numbers for effective compliance monitoring.

Why is KRA Implementing the Mobile Device Declaration System?

1. Promote Fair Tax Practices: This system ensures that all importers, manufacturers, and users of mobile devices comply with existing tax laws, creating a level playing field for businesses and enhancing revenue collection.
2. Support National Development: By boosting tax compliance, KRA can increase revenue to support public services and infrastructure projects, contributing to the nation’s development.
3. Enhance Transparency: This initiative reinforces public trust in the tax system by using transparent, technology-driven methods to track mobile device declarations.
4. Reduce Tax Evasion: Through IMEI-whitelisting, KRA can more effectively oversee mobile device tax compliance.

Key Features of the Mobile Device Declaration System

• IMEI-Based Tax Declaration: The system requires importers, manufacturers, and passengers to declare mobile devices using their unique IMEI numbers, ensuring all devices entering Kenya are recorded in the tax database.
• Real-Time Verification: This system enables real-time confirmation of applicable tax payments for mobile devices, ensuring compliance before devices are sold or used.
• Integration with Payment Providers: The system allows users to make tax payments through various channels, providing flexibility and ease of use.

Key Stakeholders

1. Importers and Clearing Agents
2. Local Device Assemblers
3. Travellers, tourists, and other visitors
4. Residents of Kenya
5. Returning Residents of Kenya

Requirements

1. Importers of Mobile Devices: Individual and bulk importers and clearing agents will be required to submit IMEI numbers of mobile devices being imported into the iCMS and DIR system for validation, tax compliance, and whitelisting.
2. Local Device Assemblers: Local device assemblers will submit IMEI numbers of assembled devices for the local market in the DIR system for validation and whitelisting.
3. Phone Retail Distributors: Those with device inventory will be required to update their phone IMEI status before 1st January 2025 to be deemed compliant.
4. Residents of Kenya: Kenyan residents will be required to check the status of the IMEIs before purchasing a device to ensure that they are not blocked from the network.
5. Travelers, Tourists, and Other Visitors: Devices on roaming (foreign) numbers do not need to go through any declaration process. Visitors buying local SIM cards will have a support process to facilitate their device compliance to access the network.
6. Returning Residents of Kenya: Returning residents will be required to declare mobile devices with their IMEI numbers on the F88 passenger declaration form upon entry, with tax payable where applicable.

Implementation Timeline

The Mobile Device Declaration System will be implemented effective 1st January 2025, with specific system guidelines to be shared prior to this date.

Frequently Asked Questions (FAQs)

1. What role do KRA and the Communications Authority (CA) play in this initiative?

   KRA’s mandate is to collect taxes and ensure compliance with tax laws, while the CA’s role involves regulating communication services. KRA works with other regulatory authorities to ensure compliance of products coming into the country. This initiative combines regulatory oversight from CA with KRA’s tax enforcement to enhance compliance and prevent tax evasion. The Communications Authority (CA) plays a crucial role in regulating telecommunications in Kenya, which includes overseeing the registration and compliance of mobile devices.

2. Will this requirement affect tourists or short-term visitors? What about Visa Fees? Isn’t this a breach of privacy of global citizens?

   No, tourists and short-term visitors will not be affected by this requirement.

3. What is the correlation between IMEI numbers and tax compliance?

   The primary role of the Kenya Revenue Authority (KRA) is to ensure that all applicable taxes on imported goods are collected at the point of entry. The registration of IMEI numbers is a crucial step in verifying tax compliance for mobile devices.

   The Communications Authority of Kenya mandates the registration of IMEI numbers as a control measure to protect Kenyans from fraudsters, counterfeit products, scammers, and smugglers. By registering IMEI numbers, we can ensure that all mobile devices in use are legitimate and have met the necessary tax obligations.

4. Was there public participation for this initiative?

   Yes, stakeholder engagement was conducted with key industry players, including manufacturers and importers, to incorporate their feedback into the implementation strategy. Additionally, the notice issued by the Kenya Revenue Authority (KRA) serves as an invitation for the public to provide their views and feedback before the initiative's implementation on January 1, 2025. This period allows for public participation, ensuring that the views and concerns of all stakeholders are considered and processed before the final implementation.

5. How will KRA handle counterfeit devices?

   Counterfeit devices are identified and flagged during the declaration process. Importers are required to provide accurate IMEI information, which is crucial in detecting and preventing the entry of counterfeit products into the market.

   Once a device is flagged as counterfeit, the information is handed over to the competent authorities. This process helps ensure that counterfeit devices are effectively removed from the supply chain, protecting consumers from fraudulent and potentially harmful products.

6. How will this affect individuals importing phones for personal use?

   Individuals bringing in mobile devices through accompanied baggage are allowed to bring in items worth up to $2000 for personal use without paying duty. However, if individuals import devices through commercial channels, such as e-commerce, applicable taxes will be levied on those devices. This distinction ensures that personal use items brought in by travelers are treated differently from those imported through commercial channels.

7. Are there exemptions for temporary visitors bringing devices?

   Yes, there are provisions for exemptions for tourists and temporary visitors. This exemption is designed to facilitate the convenience of visitors, ensuring they can use their devices during their stay without additional financial burden.

8. How will KRA enforce compliance at all entry points?

   Customs officers at all entry points will be trained and equipped to ensure that the declaration process is smooth and compliant with new regulations.

9. What penalties will be imposed for non-compliance?

   On importation, for devices which have not paid taxes, they will be deposited until such payment is done.

10. How will KRA manage issues with cloned or misused IMEI numbers?

    KRA will work closely with the Communication Authority to determine cases of misuse or cloning of IMEI numbers, ensuring that innocent users are protected and that appropriate actions are taken against offenders.

11. What happens to all the current phones operating in Kenya?

    The new regulations apply only to devices imported or assembled in Kenya from November 1, 2024, onwards as per the CA’s Public Notice.

12. How will the public be informed about the new process?

    The KRA will implement user-friendly platforms for declarations, including mobile apps and USSD services, and will engage stakeholders and conduct public awareness campaigns to inform citizens about the requirements and processes involved.

13. Will this new measure affect the cost of importing phones, and if so, how will it impact consumers?

    No, the new measure won't directly increase the cost of importing phones. Instead, it's designed to ensure that all imported devices are subject to the applicable taxes, which should help eliminate unfair competition.

    For consumers, this could mean a more balanced market where prices are fairer and more consistent across different brands and models. It will also encourage local businesses and importers to compete more on quality and service rather than just price.

14. How is KRA securing taxpayers’ data as it implements Revenue Enhancement Initiatives?

    In line with the Data Protection Act of 2019, KRA is a data controller and processor and is therefore required to comply with all provisions of this Act to ensure taxpayer data is protected. KRA is fully compliant with the requirements of the DPA, 2019, and GDPR provisions. Internally, KRA has in place physical, system, and procedural controls to safeguard data collection, usage, and sharing.