KRA sets new Sh3.2mn customs benchmark affecting select traders: what it means

The Kenya Revenue Authority (KRA) has raised the customs minimum benchmark for general containerised consolidation cargo from Sh2.5 million to Sh3.2 million per consolidated 40-foot container.

KRA in a statement said the new benchmark took effect on August 20, 2026, following consultations between the authority, the Kenya International Freight and Warehousing Association (KIFWA), representatives of small traders, cargo consolidators and other private-sector stakeholders.

The customs benchmark is the minimum reference value assigned to containerised consolidated cargo for purposes of calculating import taxes.

KRA said the adjustment is intended to establish a more predictable and equitable framework for customs valuation while addressing practices that may result in undervaluation and loss of government revenue.

The authority said the review followed concerns over the use of cargo consolidation arrangements for customs non-compliance, including undervaluation, under-declaration, misdescription, misclassification and concealment of goods.

"This is not about targeting small traders. It is about creating a level playing field where businesses compete fairly. A trader who declares goods correctly and pays the taxes due should not be disadvantaged by another trader who gains an unfair cost advantage through undervaluation, under-declaration or concealment of goods," KRA said.

KRA has clarified that the new Sh3.2 million figure does not mean that every consolidated 40-foot container will automatically be valued at Sh3.2 million.

Instead, the authority said it serves as a minimum reference point for general containerised consolidation cargo.

Where the actual value of goods contained in a shipment is higher than the benchmark, importers are required to declare the actual value, with the goods then subjected to the applicable customs valuation and tariff treatment.

"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," the authority added.

This means that goods with a value exceeding Sh3.2 million will not be limited to the benchmark for tax purposes. Importers will be required to make accurate declarations based on the actual value of their goods.

KRA said high-value electronics, including smartphones, are among the goods that can be affected by undervaluation practices.

For instance, a high-end phone could be declared as a lower-value model in an attempt to reduce the customs value and consequently the taxes payable.

The new benchmark replaces the Sh2.5 million threshold that had remained in place for approximately six years.

According to KRA, the previous benchmark was agreed following engagements between small traders and the Government, with an understanding that it would be reviewed upwards after one year.

That review did not take place, leaving the Sh2.5 million benchmark unchanged despite changes in economic conditions, import values and the nature of goods entering the country.

The move to Sh3.2 million provides what KRA described as a more current and predictable reference point for customs administration.

The authority said the measure should not be viewed as a dispute between KRA and small traders, noting that cargo consolidation remains a legitimate avenue through which small businesses can combine shipments in one container and reduce the cost of international trade.

However, KRA said some consolidation arrangements had been exploited to facilitate customs non-compliance, including inaccurate descriptions and classifications of imported goods.

The authority also raised concern over larger importers increasingly seeking to use consolidation arrangements to reduce their tax obligations.

KRA said such practices can create an uneven trading environment by allowing non-compliant businesses to bring goods into the country at artificially low costs.

The authority said the revised benchmark is also intended to protect compliant traders and local manufacturers.

According to KRA, when imported goods are undervalued or inaccurately declared, they can enter the Kenyan market at artificially low costs, potentially giving them an advantage over locally manufactured goods whose producers comply with applicable tax and regulatory requirements.

"Fair competition requires businesses to compete on the basis of efficiency, quality and innovation, rather than through avoidance of taxes," KRA said.

The authority said the objective is therefore to strengthen the integrity of customs valuation while ensuring businesses that accurately declare their goods and pay the required taxes are not disadvantaged.

KRA has also reminded traders that compliance obligations continue after consolidated cargo has been cleared through customs.

Traders selling goods in commercial centres including Eastleigh, Kamukunji, Nyamakima and Toy Market are required to meet applicable domestic tax obligations.

These include business registration, electronic invoicing requirements where applicable, and accurate declaration of income and taxes due.

The authority said importing goods and paying customs taxes represents only one part of a trader's compliance obligations, with businesses required to meet the relevant tax requirements throughout the supply chain.