What happened

The Kenya Revenue Authority (KRA) has raised the customs benchmark for consolidated cargo to KES 3.2 million. This move is aimed at reducing the number of cargo containers that are subjected to physical examination, thereby increasing efficiency at the ports of entry. The new benchmark is expected to have a significant impact on importers and exporters who use consolidated cargo services.

Context and background

The KRA has been working to improve the efficiency of its customs clearance processes, and the raising of the customs benchmark for consolidated cargo is part of these efforts. Consolidated cargo refers to the practice of combining multiple shipments from different exporters or importers into a single container, which can help reduce costs and increase efficiency. However, this practice also increases the risk of non-compliance with customs regulations, as it can be more difficult to track and verify the contents of consolidated cargo containers.

The KRA has been using a risk-based approach to target high-risk cargo containers for physical examination, but the raising of the customs benchmark for consolidated cargo is expected to reduce the number of containers that are selected for examination. This is because the new benchmark is higher than the previous one, which means that more cargo containers will be deemed low-risk and will not be subject to physical examination.

The decision to raise the customs benchmark for consolidated cargo was likely influenced by the need to balance the need for efficient customs clearance processes with the need to prevent non-compliance with customs regulations. The KRA has to ensure that it is collecting the correct amount of revenue from importers and exporters, while also facilitating trade and reducing the costs and delays associated with customs clearance processes.

Compared with what is normal

The new customs benchmark for consolidated cargo of KES 3.2 million is higher than the previous benchmark, which was not publicly disclosed. However, it is still lower than the benchmark for non-consolidated cargo, which is typically set at a higher value. The KRA's decision to raise the benchmark for consolidated cargo is consistent with international best practices, which emphasize the importance of using risk-based approaches to target high-risk cargo containers for examination.

  • The new benchmark is expected to reduce the number of cargo containers that are subjected to physical examination, which can help reduce costs and increase efficiency at the ports of entry.
  • The raising of the customs benchmark for consolidated cargo may also lead to an increase in the use of consolidated cargo services, as importers and exporters seek to take advantage of the reduced costs and increased efficiency associated with this practice.
Why it matters

The KRA's decision to raise the customs benchmark for consolidated cargo has significant implications for importers and exporters who use this service. The new benchmark is expected to reduce the number of cargo containers that are subjected to physical examination, which can help reduce costs and increase efficiency at the ports of entry. However, it also increases the risk of non-compliance with customs regulations, as it can be more difficult to track and verify the contents of consolidated cargo containers.

Importers and exporters who use consolidated cargo services need to be aware of the new benchmark and ensure that they are complying with all relevant customs regulations. This includes ensuring that all cargo is properly declared and documented, and that all relevant duties and taxes are paid. Failure to comply with customs regulations can result in significant penalties and delays, which can have a major impact on business operations.

Practical steps
  • Importers and exporters who use consolidated cargo services should review their current practices and procedures to ensure that they are complying with all relevant customs regulations.
  • They should also consider seeking the advice of a qualified customs agent or broker to ensure that they are taking advantage of all available duty savings and compliance opportunities.
  • Additionally, importers and exporters should stay up-to-date with all changes to customs regulations and procedures, including any changes to the customs benchmark for consolidated cargo.

The Tax Planning & Compliance service can help importers and exporters of customs regulations and ensure that they are in compliance with all relevant laws and regulations.

Need help with compliance? Email info@beavorenventures.co.ke or call +254 716 296 857.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.