KRA forced to respond as small scale traders plan to shut businesses over taxes

The Kenya Revenue Authority (KRA) has clarified how its revised Sh3.2 million minimum yield for consolidated cargo is applied, following growing concerns among small-scale traders who have demanded that the benchmark be reduced to the previous Sh2.5 million.

In a statement issued on August 27, 2026, KRA said the new figure is not an automatic valuation of every container or a representation of the actual tax liability for every trader. Instead, it is a risk-management reference used under a simplified customs clearance arrangement for consolidated cargo.

The clarification comes as small-scale traders continue to oppose the increase, with traders in business centres including Kamukunji, Nyamakima and Gikomba backing calls for the benchmark to be returned to Sh2.5 million.

A report by NTV indicated that traders were threatening to stage a countrywide strike over the issue, arguing that the additional Sh700,000 in the benchmark was placing further pressure on businesses facing rising operating costs. The MSMEs alliance had called on businesses to close until their concerns were addressed.

KRA, however, maintains that the revised benchmark is necessary and is not a new tax.

Under the customs valuation framework, KRA said the value of imported goods is governed by Section 122 and the Fourth Schedule of the East African Community Customs Management Act. Customs duty is generally assessed using the transaction value of the goods, subject to applicable legal and risk-management requirements.

Where an import declaration is supported by proper commercial documentation, KRA said Customs assesses the goods based on the declared transaction value.

The authority said the consolidation arrangement exists in part because small-scale traders often combine their shipments to reduce logistics costs and simplify the clearance of numerous individual consignments.

Under this arrangement, Customs uses a minimum yield test for containers carrying commonly imported general goods. KRA described the test as a reference point for determining whether a container can qualify for clearance with minimal Customs intervention based on established risk parameters.

The minimum yield had last been revised in the 2022/23 financial year. KRA said changes in exchange rates, freight charges and national and East African Community tax laws had since altered the operating environment, prompting a review.

Following consultations with industry stakeholders, KRA said it granted traders a one-month grace period after stakeholders requested additional time to prepare. The revised Sh3.2 million minimum yield took effect on August 21, 2026, according to the latest statement.

The authority stressed that this does not mean Customs will automatically treat every consolidated container as having goods worth Sh3.2 million.

Instead, the actual tax liability depends on the nature, value and classification of the goods. KRA said factors such as the cost of goods, insurance and freight also influence customs value.

This means traders who believe the benchmark does not accurately reflect their cargo have an option to leave the simplified arrangement and request verification by Customs.

Under that process, Customs can examine the container and determine the applicable taxes based on its actual contents, correct customs value and proper classification.

KRA also said traders can choose to de-consolidate their cargo, separating the goods into individual consignee parcels or consignments. The respective importers can then make individual declarations and pay the applicable taxes directly to KRA based on their own goods.

The clarification is significant for traders who have interpreted the Sh3.2 million figure as a mandatory valuation for every consolidated container.

In comments carried in the NTV report, KRA indicated that where traders consider the benchmark unsuitable for their goods, Customs can verify the shipment and establish the actual taxes payable. The resulting value could be lower or higher than the Sh3.2 million reference point, depending on the contents and their classification.

KRA said the review is also intended to address customs practices including undervaluation, under-declaration, misdescription, misclassification and concealment of goods.

The authority has maintained that cargo consolidation remains a legitimate and supported option for small-scale traders and said it would continue engaging industry stakeholders while balancing trade facilitation with protection of government revenue.

For traders challenging the new benchmark, KRA's latest clarification therefore sets out two alternatives to the simplified arrangement: requesting Customs verification based on the actual goods, or de-consolidating cargo so individual importers can make their own declarations.