Kenya Revenue Authority (KRA) Chairman Ndiritu Muriithi is at the centre of growing concerns among small importers following the introduction of a new tax benchmark that has raised the minimum value used in the clearance of some consolidated cargo.
The change has left many traders worried about the rising cost of bringing goods into the country and whether their businesses can survive the additional financial pressure.
The new arrangement has placed small-scale importers under pressure, particularly those who combine their goods in containers to reduce shipping and transport costs.
For many of them, the concern is no longer simply about paying tax, but whether they can continue operating when the amount demanded by the taxman is far above what they paid for their goods.
The benchmark for a standard container has been raised from about KSh2.5 million to KSh3.2 million. KRA has explained that the figure is a benchmark used for risk management under simplified clearance arrangements for consolidated cargo and is not meant to be a flat tax imposed on every container.
However, traders say the practical impact is much heavier.
A small importer who buys goods worth KSh700,000 abroad may find that the value used during assessment is significantly higher than the actual amount paid for the goods.
If KSh3.2 million is used as the taxable value, a 25 per cent duty alone would amount to KSh800,000. Other charges and levies, including the Import Declaration Fee and Railway Development Levy, can then increase the overall cost.
Once port handling, storage and other charges are added, traders can end up facing bills running into millions of shillings.
This has become a major concern for small businesses that depend on imported goods for their daily operations. Many of these traders do not have large financial reserves. Some rely on loans to purchase stock, meaning every additional day their goods remain at the port adds to their financial pressure.
Muriithi has defended the new approach, arguing that KRA needs to deal with the undervaluation of imported goods. Undervaluation has been a long-standing challenge in the tax system, with some importers accused of declaring goods at values lower than what they actually paid.
The challenge, however, is ensuring that efforts to stop tax evasion do not end up hurting legitimate traders who declare the correct value of their goods.
KRA says an importer who believes the benchmark does not reflect the actual value of their goods can request physical verification and an individual assessment.
Traders can also have their cargo deconsolidated so that they are assessed based on their own goods rather than the container benchmark.
But that option comes with its own costs. Deconsolidation can lead to additional handling, delays and storage charges. For a trader already struggling to meet the initial tax bill, these extra expenses can make the process difficult.
This is why the new policy has sparked frustration among some importers. They argue that while fighting undervaluation is necessary, the system should also make it easier for genuine traders to prove the actual value of their goods without being punished through delays and additional charges.
The wider concern is what the higher costs will mean for consumers. Small importers supply many of the products found in local shops and markets.
If their cost of bringing goods into the country rises sharply, they may have little choice but to increase selling prices.
Others may reduce their stock, stop importing altogether or close their businesses. Such an outcome could affect employment and the availability of affordable goods.
The government has a clear responsibility to collect revenue and protect the tax base. At the same time, the process must remain fair to businesses that are operating within the law.
For small traders, the issue is simple. They want to pay the correct tax based on the real value of their goods without being pushed into a situation where challenging an assessment costs almost as much as accepting it.
The debate around the KSh3.2 million benchmark is therefore likely to continue, especially if traders feel that the new system is making legitimate business too expensive. For many importers, the numbers have to make sense for their businesses to remain open.
