Why small traders should give new customs benchmark a chance
Institutionalised in Kenya in 2016/17 as a deliberate trade-facilitation initiative for small-scale importers, cargo consolidation allows parcels belonging to several traders to be pooled into one container and declared by an approved consolidator. This enables traders to share logistics costs and reduces the administrative burden associated with individually clearing numerous small consignments.
Kenya's customs administration plays a vital role in enabling fair trade while safeguarding borders and government revenue. For small importers, this balance is crucial, as their livelihoods depend on imported goods. The Kenya Revenue Authority (KRA) acknowledges this and has implemented measures to facilitate legitimate trade, making it easier, faster, and more affordable for small traders.
One such initiative is cargo consolidation, introduced in Kenya in 2016/17. This measure pools parcels from multiple traders into one container, shared and declared by an approved consolidator. This reduces logistics costs and administrative burden for small traders. However, the integrity of this facility must be protected, as its value is significant. Recently, the minimum yield for general consolidated cargo was revised to KSh3.2 million, leading to controversy due to a misunderstanding of its purpose.
The minimum yield is not the actual tax liability of each container or trader, but a reference point for determining if containers with commonly imported goods meet the minimum expected tax yield for simplified clearance. It is a risk-management tool, not a blanket tax on small traders. The previous minimum yield was last revised in the 2022/23 financial year, and a review was necessary due to changes in the trading environment, such as cost fluctuations, exchange rates, and tax laws.
The benchmark is essential for preventing abuse within the simplified clearance system, such as undervaluation and misdescription of goods. These practices can lead to lower taxes than would ordinarily be payable. Safeguards are necessary to protect the integrity of the system, ensuring compliant traders do not compete unfairly with non-compliant operators.
Small traders should be given the opportunity to try the revised benchmark, as it aims to strengthen the facilitation of legitimate commerce while remaining resistant to abuse. A fair customs system benefits traders, consumers, and the economy as a whole.
Written by urgent.news from Capital Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
