The Kenya Revenue Authority (KRA) is facing growing anger from small-scale importers after a sudden increase in the minimum customs benchmark left traders staring at much bigger clearance bills.
The new benchmark, which took effect on August 20, raised the minimum reference value for general consolidated 40-foot cargo from KSh 2.5 million to KSh 3.2 million a 28 per cent jump.
For traders who depend on consolidated shipments from China, the change has become a serious business headache.
Many of them do not own entire containers. They share space with other importers, bringing in relatively small quantities of household goods and other everyday products.
This is where the anger against KRA is coming from.
A trader can spend about KSh 700,000 buying goods, yet find themselves dealing with customs calculations based around a much higher benchmark.
Even though KRA insists that KSh 3.2 million is a reference point and not an automatic valuation for every container, traders say the practical impact can still be severe when they try to clear their goods.
KRA says the measure is meant to stop undervaluation, under-declaration and concealment of high-value goods. But small traders are asking whether the fight against tax evasion should come at the expense of legitimate businesses.
The frustration boiled over on Friday, August 28, when traders in Nairobi protested against the new customs rules.
Businesses in areas including Kamukunji, Gikomba and Nyamakima were affected as traders took to the streets and headed towards KRA’s Times Tower headquarters. Police used tear gas to disperse some demonstrators.
The timing of the change has also raised eyebrows.
Traders say they were suddenly confronted with higher costs at a time when many small businesses are already operating on narrow margins.
Once duty and other import charges are added, followed by shipping, port handling and storage fees, the economics of a small shipment can quickly become difficult to justify.
KRA, however, maintains that the old KSh 2.5 million benchmark had remained unchanged for about six years and argues that the new measure is necessary to close loopholes that have allowed some importers to avoid paying the correct taxes.
That explanation may satisfy the revenue authority, but it has done little to calm traders.
For a large company, an unexpected increase in clearance costs may be absorbed or passed on to customers. For a small importer who has borrowed money to buy stock, the same increase can wipe out the expected profit before the goods even reach the shop.
And that is the uncomfortable question now confronting KRA: how far can the taxman push small businesses in the name of raising revenue before the businesses themselves begin to disappear?
The protests have made one thing clear. Traders are not simply complaining about paying taxes. They are challenging a system they believe can make ordinary, legitimate trade increasingly difficult to sustain.
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