Interlinking Cargo Deconsolidation, Transfer Pricing, Anti-Counterfeit Authority & Kenya Bureau of Standards

Nov 29, 2023 | Bussines, Case Brief, Investments, Law, Our Highlights

The Government of Kenya has proposed and implemented various regulations concerning tax, intellectual property, and quality assurance measures to the benefit – or lack of it – of the government, investors, and consumers.

Imported products that require certification marks by the Kenya Bureau of Standards (KEBS) are usually verified abroad during the exporting process, through various entities that are approved by KEBS as their Pre-Export Verification of Conformity (PVOC) Partners. Therefore, once the items are inspected at the exporting country, the Certificate of Conformity (COC) is issued and forms part of the application for KEBS stickers.

The issuance of a COC is inadequate on matters compliance with Intellectual Property (IP); therefore, the Government of Kenya opted to operationalize the Anti-Counterfeit Act whereby a regulatory body; the Anti-Counterfeit Authority (ACA), has the obligation to effect the provisions of the Anti-Counterfeit Act. As per the law, ACA requires that any person that ships their products to Kenya, directly or indirectly, subject their IP through recordation with ACA.

IP recordation is a different process from that of IP Registration at the IP Office in Kenya, and IP recordation does not necessarily mean an entity must undergo IP Registration. Additionally, a frequent importer to Kenya can use the data generated from KENTRADE to establish the use of a certain IP in case there is a need to raise opposition for any person that is likely to offend their IP.

It is essential to mention that another major importance of IPR recordation is deterrence. By publicly recording IPR’s, this discourages potential infringers from reproducing or using the protected work. Through developing an IPR database of all goods imported into Kenya, IPR recordation discourages counterfeit goods from being imported into the country.

Cargo Deconsolidation as a measure of determination of what amount ought to be paid as tax also enhances possibilities of protecting certain IP interests. On the other hand, Cargo Deconsolidation increases the amount that ought to be paid as tax as compared to the weight ratio that was previously used by the Kenya Revenue Authority (KRA).

Furthermore, Kenya is keen on revamping its Transfer Pricing Rules. This indicates that there is a need for various entities with subsidiaries or branch offices in Kenya, to review various taxing principles as per the currently proposed draft Transfer Pricing Rules, and the recent amendments to the Income Tax Act on how to qualify IP income. It will be more advantageous for an entity to have its IP undergo recordation with ACA for purposes of advancing the intended commercial interests under licensing or assignment. Entities are encouraged to review the interlinking elements among the various government agencies to maximize their commercial interests.