Small-scale traders in Nairobi have drawn a line in the sand with the Kenya Revenue Authority, vowing to return to the streets every Friday until the tax agency agrees to hold direct talks over a new customs threshold affecting consolidated cargo.
The traders say the revised requirement is placing a heavier financial burden on small-scale importers and could drive up the cost of goods once the extra expenses are passed on to consumers.
Their main concern is KRA’s decision to raise the minimum yield applied to containers carrying general consolidated cargo from Sh2.5 million to Sh3.2 million.
The new figure became effective on August 21 after traders were given a one-month grace period to make preparations.
Consolidated cargo enables several small importers to ship their goods together in one container. By sharing the same container, traders can reduce shipping and other logistics expenses that would otherwise be incurred when each importer brings in a separate consignment.
KRA has maintained that the Sh3.2 million figure should not be viewed as a standard tax charged on each container.
The authority says the amount of customs duty payable is determined by issues such as the type and value of the goods, their classification and the customs and tax rules that apply to them.
The traders, however, say challenges arise when the total customs value of goods inside a consolidated container is below the new benchmark.
Under the simplified clearance arrangement, importers in such a situation may be required to meet the minimum yield. Alternatively, they can leave the simplified system and have Customs verify their goods individually before determining the taxes based on what is actually contained in the consignment and its value.
Traders can also request that their cargo be de-consolidated, meaning individual consignees would make separate declarations and settle taxes according to their respective goods.
The disagreement prompted demonstrations in Nairobi on Friday, with the traders calling for a physical engagement with KRA instead of what they described as responses issued through social media.
A spokesperson for the traders questioned the manner in which the authority had handled their complaints.
"They saw it fit to respond to us via the internet on X; all their responses are on X, which I feel is very unprofessional," the spokesperson said.
The protest followed a statement posted by KRA on X on Thursday, in which the authority explained the reason for reviewing the minimum yield and outlined the choices available to traders affected by the change.
KRA said the minimum yield was established as a simplified clearance system for containers carrying commonly imported general goods.
It allows consolidated consignments to be processed using a reference point without requiring every small-scale importer to produce separate transaction documents.
The authority said the previous benchmark had remained unchanged since the 2022/23 financial year, despite changes in exchange rates, freight costs and national and East African Community tax laws.
"These changes necessitated a review of the minimum yield applicable to containers carrying general consolidated cargo to ensure that it remains relevant to prevailing trading and economic conditions," KRA said.
KRA also said the review was carried out after consultations with industry stakeholders. The authority added that traders had asked for more time to prepare for the change and were consequently given an additional month before the new threshold was enforced.
The tax agency further sought to clear up what it said was a misunderstanding surrounding the Sh3.2 million figure.
"The minimum yield is not a representation of the actual tax liability for the goods contained in a container," the authority said, explaining that the amount serves as a risk-management reference under the simplified clearance system.
KRA said importers who do not want to use the simplified arrangement can request Customs to inspect their containers and work out the applicable taxes from the actual contents, customs value and classification of the goods.
They can also choose to separate the cargo and submit individual declarations for each consignee.
The explanation has done little to calm the traders, who say they want KRA officials to listen to their concerns in person.
They have accused the authority of failing to adequately address the effect of the new arrangement on small-scale importers and insist that communication through X cannot replace direct consultations.
The traders argue that the higher benchmark will make importing more expensive for them, increasing the cost of running their businesses.
They further warn that those costs could eventually be reflected in the prices paid by consumers for imported goods.
"We remain steadfast, our resolve unwavering; every Friday we will continue talking until KRA calls us for talks. And they should stop saying we don't want to pay. All we want is to have a meeting and talk, but they have refused; they are addressing us online."
The traders are now preparing for continued Friday demonstrations, with their position dependent on whether KRA agrees to the face-to-face meeting they have been demanding.