KRA Explains Sh3.2M Cargo Rule as Traders Protest Higher Import Costs

NAIROBI — The Kenya Revenue Authority (KRA) has moved to calm confusion over a new Sh3.2 million customs benchmark for consolidated cargo, insisting that the figure is not a flat tax that traders must pay on every 40-foot container.

The clarification comes as small-scale traders protest the higher benchmark, with businesses in parts of Nairobi’s Central Business District closing on Friday as traders called for the measure to be withdrawn or reviewed.

KRA says the revised figure is a minimum yield used for risk management under a simplified customs clearance arrangement. It is intended to help Customs identify consignments that can be processed with limited intervention.

The benchmark was raised from Sh2.5 million to Sh3.2 million and took effect on August 21, 2026. The 28 per cent increase has nevertheless caused concern among traders who depend on consolidated shipments to bring goods into Kenya.

What the Sh3.2 million figure actually means

For traders, the distinction is important.

The Sh3.2 million figure does not mean a trader automatically owes KRA Sh3.2 million in taxes.

Instead, KRA says the benchmark is used within the simplified clearance system for consolidated cargo, where goods belonging to several importers are packed into one container.

The actual customs value and tax payable are determined from the nature, value and classification of the goods, alongside applicable customs rules.

KRA said that where an import declaration is backed by proper commercial documentation, Customs can assess the shipment using its declared transaction value, subject to legal requirements and risk controls.

This means a container carrying goods worth more than Sh3.2 million is not capped at that figure for taxation. The importer is expected to declare the actual value and pay the applicable taxes.

Why KRA raised the benchmark

KRA says the previous minimum yield had been in place since the 2022/23 financial year.

The authority cited changes in exchange rates, freight costs and national and East African Community tax laws as some of the reasons for reviewing the benchmark.

It also said the review followed consultations with industry stakeholders, including small traders and cargo consolidators.

KRA says the system is intended to reduce opportunities for undervaluation, under-declaration and misclassification while allowing legitimate small-scale importers to clear goods more efficiently.

The authority has argued that traders who correctly declare their goods should not be disadvantaged by businesses that secure lower costs by declaring imports below their true value.

Why traders are angry

For many small businesses, however, the issue is not simply whether Sh3.2 million is technically a tax.

Traders say the higher benchmark could increase the cost of clearing consolidated shipments and squeeze already thin profit margins.

Businesses in markets such as Kamukunji, Gikomba and Nyamakima have been among those opposing the increase.

The dispute has now moved beyond social-media complaints. Traders have organised demonstrations and a business shutdown, with police using tear gas to disperse protesters in Nairobi on Friday. Reuters reported that hundreds of businesses in the city centre closed amid the demonstrations.

That reaction highlights the gap between how KRA describes the measure and how it is being experienced by traders.

For KRA, the Sh3.2 million figure is a risk-control mechanism.

For traders, any change that makes clearing goods more expensive can affect the final price of merchandise, cash flow and the ability of small businesses to remain competitive.

Traders have an alternative

KRA says traders who do not want to use the simplified clearance arrangement are not locked into it.

They can ask Customs to verify their container and calculate the applicable taxes based on the actual contents, correct customs value and classification of the goods.

They can also choose to de-consolidate the shipment.

Under that arrangement, individual importers make separate declarations and pay the taxes due on their own consignments.

The choice, however, raises a broader question for small traders: whether moving away from consolidation could increase administrative and logistics costs.

Cargo consolidation is popular precisely because it allows several small importers to share shipping and clearance costs rather than filling an entire container on their own.

KRA says there was a grace period

The authority says the revised benchmark was introduced after consultations with stakeholders and that traders requested additional time to prepare.

KRA subsequently allowed a one-month grace period before the new benchmark took effect on August 21.

The authority maintains that it is trying to strike a balance between making trade easier for small businesses and protecting government revenue.

The protests suggest that the balance remains contested.

What traders should know

The most important point for importers is that Sh3.2 million is not an automatic tax charge.

Customs duty and other applicable taxes continue to depend on factors such as the nature and classification of the goods and their customs value.

Traders who believe the simplified arrangement does not accurately reflect their cargo can seek individual Customs verification.

The immediate dispute, therefore, is less about a new Sh3.2 million tax and more about how KRA uses the new benchmark to assess and clear consolidated imports.

That distinction is likely to remain at the centre of negotiations between the tax authority and traders as businesses push for a review of the new threshold.

For thousands of small importers whose livelihoods depend on bringing merchandise into Kenya at a manageable cost, the question is ultimately straightforward: will the new customs system make trade fairer without making small businesses more expensive to run?

About the Author

Maureen Onyango is a journalist passionate about storytelling, life coaching and spiritual lessons. She studied at the Kenya Institute of Management and enjoys telling stories that inform, inspire and empower communities.