Kenya Revenue Authority (KRA) chairman Ndiritu Muriithi has defended the Sh3.2 million minimum benchmark for consolidated cargo, saying it is an expected tax yield rather than a fixed duty imposed on every importer.
His defence comes amid opposition to the Kenya Revenue Authority’s increase of the minimum benchmark for consolidated cargo from Sh2.5 million to Sh3.2 million.
The 28% increase, which took effect on August 21, has angered small-scale traders, who say the additional cost is eroding their profit margins and raising the cost of imports. Traders in Nairobi held demonstrations on August 28 over the new customs valuation rules.
Speaking on Radio Generation on Tuesday, Muriithi said the consolidation system was introduced to help small traders who cannot fill an entire container on their own.
“As a small trader… I cannot fill a container. So my goods, your goods… maybe there's 10 of us. We put in one container,” he said.
The KRA chairman said traders then share the freight costs, while customs duty should be calculated according to the goods belonging to each importer.
“If you brought pens, you should pay duty on the pens. If you brought phones, you should pay duty on the phones. If you brought T-shirts, same,” Muriithi said.
He said the assessment process was also necessary to deal with undervaluation, where importers allegedly declare goods at a lower value than what they actually paid.
“There is the commercial invoice, meaning what you have actually bought the thing for, then we will collude with the seller, and they give you another invoice,” he said.
The KRA chairman said the Sh3.2 million figure was a “minimum expectation” based on the authority’s assessment of the expected yield from a container.
“All we have said is this: is a minimum expectation,” he said.
He stressed that traders who believe their actual tax liability is lower do not have to accept the benchmark.
“If you believe your container, the duty is maybe one million or two million, it is okay, and it is your right if you say, ‘No, no, no. I'm not paying the benchmark.’ You go to calculate,” he said.
KRA has separately clarified that the Sh3.2 million figure is a risk-management reference for simplified clearance, rather than the actual tax payable. Traders can request verification and individual assessment of their goods or de-consolidate the cargo and make separate declarations.
Muriithi said the alternative would be for customs officials to open every container and conduct deconsolidation, a process that could slow clearance.
He also said KRA was improving scanning technology to establish more accurately what is inside containers.
The discussion also turned to the possibility of “smart containers” that could monitor goods as they are loaded, transported and removed.
“What a marvelous idea!” Muriithi said, agreeing that such technology could improve accountability and tracking across the supply chain.
He said the technology could eventually benefit other sectors, including horticulture and aquaculture, by improving monitoring and accountability.