Dutch businesses in Kenya have urged the government to address barriers to trade. Among the issues they cited were delayed value-added tax refunds, high and unpredictable taxation, excessive import duties on electric vehicle spares, and bribery.

These concerns were raised during a CEOs’ roundtable meeting at a Nairobi hotel on Tuesday, attended by Netherlands King Willem-Alexander and Queen Máxima. Among the business leaders present was Kimoi Moi, Director of Investments at Agrico/Potato Services Africa, a leading player in the potato value chain.

Mr Moi called for tax relief on imported potato seeds.

“We ask for relief on duty for potato seeds because 99.9 per cent of potatoes are sourced locally, with only 0.1 per cent imported,” he said.

The meeting was also attended by Prime Cabinet Secretary Musalia Mudavadi, Agriculture and Livestock Cabinet Secretary Mutahi Kagwe, and Principal Secretary for Investment Promotion Hassan Abubakar.

The roundtable discussions covered fines, customs, product classification, and government contracts, as well as the agriculture, water, logistics, healthcare, energy, and electric mobility sectors.

Maarten Fonteijn, Country Manager of eBee Mobility Kenya, urged the government to apply favourable import duties on electric bicycles components to promote electric mobility in Kenya, as is done in neighbouring countries.

He argued that local assembly creates employment, fosters skills development, and strengthens domestic manufacturing.

“However, certain issues are hindering the sector’s growth, particularly the classification of imported electric bicycles components,” said Fonteijn.

In 2022, eBee imported a container of components for assembling electric bicycles, excluding batteries.

“These components were initially classified under HS Code 8714, which carries a 10 per cent import duty. However, Kenya Revenue Authority reclassified the shipment under HS Code 8711.60, applicable to fully assembled electric bicycles, resulting in a 25 per cent import duty,” he said.

Following a legal review, the court ruled in favour of KRA’s interpretation, requiring eBee to pay an additional Sh2.7 million in import duty.

To resolve the issue, Fonteijn proposed introduction of a dedicated HS Code 8711.60.10 for electric bicycles with pedal assistance, as is in other countries.

“This classification would enable the government to tax and regulate this sector appropriately while fostering its growth,” he added.

Responding to some of the concerns, PS Abubakar said: “We have heard the issues and will engage the relevant State agencies, whether through legal review, policy adjustments, or administrative intervention.”

He noted that the Netherlands is Kenya’s leading export destination in Europe and the country’s fifth-largest source of foreign direct investment for Kenya.

“A memorandum of understanding was signed earlier today between the State Department of Investment Promotion and the Netherlands Business Hub Kenya (NLBH) to accelerate the resolution of business challenges facing Dutch enterprises operating in Kenya.”

Jules Delahaije, Chairman of NLBH, welcomed the MoU, saying it would help address some of the bottlenecks raised.

“The cooperation between the State Department of Investment Promotion and the hub confirms the value of the Netherlands business community in Kenya,” he said.

“It is an excellent example of the public and private sectors working together to promote business in Kenya and improve the investment climate.”

On concerns over unpredictable taxation, the PS noted that Kenya now has a national tax policy providing for a comprehensive tax rate review every five years.