The Kenya Revenue Authority (KRA) has raised the minimum customs benchmark for general containerised consolidation cargo from Sh2.5 million to Sh3.2 million.
The move targets to seal valuation loopholes and protect compliant traders from unfair competition.
In a statement released to the media on Tuesday, KRA said the revised benchmark took effect on August 20 following consultations with the Kenya International Freight and Warehousing Association (KIFWA), small traders, cargo consolidators and other private-sector stakeholders.
The authority said the new threshold is intended to strengthen customs valuation, protect government revenue and create a level playing field for businesses that declare their goods accurately and pay the required taxes.
KRA said cargo consolidation remains an important avenue for small traders to import goods by combining shipments in a single container and reducing the cost of international trade.
However, it said the arrangement has in some instances been abused through undervaluation, under-declaration, misdescription, misclassification and concealment of high-value goods, resulting in revenue losses and giving non-compliant businesses an artificial cost advantage.
High-value electronics, including smartphones, are among the goods affected by such practices, with KRA citing cases where high-end phones could be declared as lower-value models to reduce customs value and the taxes payable.
The authority stressed that the Sh3.2 million figure is a minimum reference point and not a flat valuation for every container.
“The Sh3.2 million benchmark does not mean that every container is valued at Sh3.2 million. If the actual value of the goods is higher, that value must be declared and the correct taxes paid,” KRA said, adding that the benchmark is intended to strengthen valuation controls rather than provide a ceiling for imported goods.
KRA said the previous Sh2.5 million benchmark had remained unchanged for about six years despite changes in economic conditions, import values and the nature of goods entering the country.
The previous threshold had been agreed between small traders and the Government with an understanding that it would be reviewed upwards after one year, but the review did not take place.
KRA said the new benchmark would also help protect local manufacturers from unfair competition arising from undervalued imports.
It said inaccurately declared imports could enter the Kenyan market at artificially low prices, disadvantaging locally manufactured goods whose producers comply with tax and other regulatory requirements.
The authority dismissed suggestions that the measure was a dispute with small traders, saying it recognised the contribution of small businesses to the economy and that many traders and consolidators comply with customs requirements.
Instead, KRA said its focus was on practices that give some businesses an unfair advantage.
The authority also reminded traders that tax compliance does not end after consolidated cargo has been cleared through customs.
Traders selling goods in commercial centres including Eastleigh, Kamukunji, Nyamakima and Toy Market must meet applicable domestic tax obligations, including business registration, electronic invoicing requirements where applicable and accurate declaration of income and taxes due.
KRA said compliance must therefore cover the entire supply chain, from importation and payment of customs taxes to the subsequent sale of goods in the domestic market.
By Chris Mahandara
