Taxman raises cargo duty to Sh3.2m

A section of containers at the Port of Mombasa, March 3, 2025.[File]

The Kenya Revenue Authority  (KRA) has raised the customs minimum benchmark for containerised consolidation cargo from Sh2.5 million to Sh3.2 million, aiming to curb customs undervaluation and enhance tax compliance.

The new directive, which took effect on August 20, 2026, follows a transitional period of consultations involving KRA, the Kenya International Freight and Warehousing Association (KIFWA), small traders, cargo consolidators, and private-sector stakeholders.

KRA highlighted cases of undervaluation, under-declaration, misdescription, misclassification, and concealment of high-value goods.

For instance, a high-end phone may be declared as a lower-value model to reduce taxes payable.

Larger importers have also been noted to misuse consolidation to lower tax liabilities, creating unfair competition for compliant traders.

“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. The benchmark is intended to strengthen valuation controls, not to provide a ceiling for the value of imported goods,” said KRA in a statement dated August 25.

The previous benchmark had remained unchanged for about six years despite economic shifts and changes in import patterns. The update thus reflects current market realities and offers a fairer, more predictable basis for customs values.

Undervalued imports can enter markets at artificially low prices, disadvantaging local producers who comply with tax and regulatory requirements.

Despite KRA’s assurances, traders’ associations last week announced a boycott starting August 28, arguing that the benchmark hike will increase their operational costs and disrupt their businesses, particularly those relying on cargo consolidation to keep import expenses low.

The government now faces pressure to engage with traders to address their concerns while safeguarding revenue collection and ensuring a fair-trading environment.

Additionally, KRA reminded traders that compliance extends beyond customs clearance. Traders selling goods in key commercial markets like Eastleigh, Kamukunji, Nyamakima, and Toy Market must meet domestic tax obligations, including business registration, electronic invoicing, and accurate income and tax declarations.

“Importing goods and paying customs taxes is only one part of compliance. When the goods enter the domestic market and are sold, the trader must also meet the applicable tax obligations. Every business must contribute its fair share towards national development,” KRA noted.

As the boycott deadline nears, a balance between fair taxation and business sustainability remains critical, with KRA’s updated benchmark aiming to foster a level playing field in Kenya’s trade ecosystem.