KRA Explains Consolidated Cargo Tax Rules for Small Traders After Concerns

The Kenya Revenue Authority (KRA) has clarified how customs taxes are assessed on consolidated cargo, particularly shipments brought in by small-scale traders who pool their goods to reduce logistics and clearance costs. 

In a statement on Thursday, August 27, the tax authority said the consolidation arrangement is intended to simplify customs processes for small traders while ensuring compliance with the law, protection of government revenue and a fair business environment. 

"The valuation of imported goods for Customs purposes is governed by law. Under Section 122 and the Fourth Schedule of the East African Community Customs Management Act, Customs duty is assessed based on the transaction value of the goods.

"This is the basis applied by Kenya since adopting the World Trade Organization (WTO) Customs Valuation Agreement," the statement read.

KRA explained that customs valuation is based on the transaction value of imported goods where the importer provides the required commercial documentation and meets applicable legal and risk-management requirements.

"Where an import declaration is supported by proper commercial documentation, Customs assesses the goods based on the declared transaction value, subject to the applicable legal and risk-management requirements," the statement added.

The authority said cargo consolidation has become particularly important for small-scale traders, who combine shipments to make transportation and customs clearance easier while reducing the administrative burden associated with handling multiple small consignments.

"Due to the unique needs of small-scale traders, many consolidate their goods to simplify shipping clearance formalities, including the payment of requisite customs taxes. 

"This arrangement provides traders with a faster and more predictable clearance process while reducing the administrative burden associated with individually assessing numerous small consignments," the statement further read.

To support this system, KRA said Customs applies a minimum yield test to containers carrying commonly imported general goods. 

The measure provides a simplified clearance option instead of requiring individual transaction documents from every small-scale trader whose goods are consolidated in the same container.

"To facilitate the clearance of goods imported by small-scale traders through consolidation, Customs sets a minimum yield test for containers carrying commonly imported general goods, providing a simplified alternative to requiring every small-scale trader to present individual transaction documents," the statement explained.

KRA said the minimum yield is used as a risk-management reference to determine whether containers meet the threshold for simplified clearance, allowing those that satisfy the established parameters to undergo minimal Customs intervention.

"The minimum yield serves as a reference point for identifying containers that meet the threshold for clearance with minimal Customs intervention, based on established risk parameters. The minimum yield test was last revised in the financial year 2022/23," the statement noted.

KRA noted that customs valuation is affected by several components, including the cost of the imported goods, freight and insurance. 

Changes in these factors, together with changes in tax laws, prompted a review of the minimum yield applicable to consolidated general cargo.

"Since the last revision, the operating environment has changed significantly, including changes in exchange rates, freight charges, and national and EAC Tax Laws.

"These changes necessitated a review of the minimum yield applicable to containers carrying general consolidated cargo to ensure that it remains relevant to prevailing trading and economic conditions," the statement read.

KRA said the review was carried out in consultation with industry stakeholders. 

It added that traders were given additional time to prepare for the new requirement after stakeholders requested a grace period.

"The review was undertaken in consultation with industry stakeholders. Following a request from the stakeholders for additional time to prepare for implementation, KRA granted a one-month grace period. The revised minimum yield of Ksh3.2M therefore took effect on 21 August 2026," the statement further read.

The authority stressed that the Ksh3.2 million minimum yield should not be interpreted as the actual tax payable on all goods contained in a consolidated container. 

Instead, it is a reference used under the simplified clearance arrangement, with the actual tax liability determined according to the goods imported.

"It is important to emphasise that the minimum yield is not a representation of the actual tax liability for the goods contained in a container. Rather, it is a risk-management reference used under the simplified clearance arrangement, while the actual tax liability is determined based on the nature, value and classification of the goods, in accordance with the applicable customs valuation and tax provisions," the statement explained.

KRA said traders who do not wish to use the simplified arrangement can request individual verification of their cargo so that Customs can determine the applicable taxes based on the actual goods in the container.

The authority also said traders can choose to separate their goods from the consolidated shipment, allowing each importer to make an individual customs declaration and pay the taxes applicable to their specific goods.

"A trader may opt out of the simplified trade facilitation arrangement and request Customs to verify their container and determine the applicable taxes based on the actual contents, their correct Customs value and proper classification.

"Alternatively, traders may opt to de-consolidate cargo into individual consignee parcels or consignments, allowing the respective importers to make individual declarations and pay the requisite taxes directly to KRA based on their goods," the statement concluded.

The clarification comes days after KRA increased the Customs Minimum Benchmark for general containerised consolidation cargo from KSh2.5 million to KSh3.2 million, with the revised threshold taking effect on August 20, 2026.

In a statement issued on Tuesday, August 25, the authority said the adjustment followed a transitional period that included consultations with the Kenya International Freight and Warehousing Association (KIFWA), small traders, cargo consolidators and other private-sector stakeholders.

KRA said the review is aimed at strengthening customs controls, protecting government revenue and ensuring businesses that comply with tax requirements are not disadvantaged by traders who reduce their tax obligations through inaccurate declarations.

The authority noted that cargo consolidation remains an important option for small-scale importers as it enables several shipments to be transported in a single container, helping lower the cost of importing goods into Kenya.

However, KRA said the arrangement has also been abused through practices including undervaluation, under-declaration, misdescription, misclassification and concealment of high-value goods.