What happened

President William Ruto recently directed the Kenya Revenue Authority (KRA) to reverse the consolidated cargo benchmark to KES 2.5 million. The order means that the threshold used to assess the value of imported cargo for customs duty calculation will be lowered to this new figure. Importers whose shipments are valued above KES 2.5 million will now be subject to the full set of duties and taxes that KRA applies under the revised benchmark. The directive was issued as part of the government’s broader effort to tighten revenue collection and close perceived loopholes in customs valuation.

Context and background

The consolidated cargo benchmark is a reference point that KRA employs to determine whether a shipment should be assessed on a detailed, item‑by‑item basis or on a simplified valuation method. Historically, the benchmark has been set at a level that reflects the average value of commercial consignments entering Kenya, allowing smaller shipments to be processed more quickly and with reduced administrative burden. Over the past few years, the benchmark has been periodically adjusted to align with inflation, changes in trade patterns, and fiscal policy objectives.

President Ruto’s decision follows a series of parliamentary debates and public statements in which the administration highlighted concerns that the existing benchmark was too high, enabling some importers to under‑declare cargo values and thereby reduce duty liabilities. The Treasury and KRA have both reported that revenue from customs duties has been under pressure, prompting a review of valuation thresholds. In a televised address, the President emphasized the need for “fair play” in trade and warned that the government would take decisive steps to ensure that all importers contribute their fair share to the national coffers.

Industry bodies, including the Kenya Association of Manufacturers (KAM) and the Kenya Chamber of Commerce, have responded with a mixture of caution and criticism. While they acknowledge the importance of revenue mobilisation, they argue that a sudden reduction in the benchmark could increase compliance costs for small and medium‑sized enterprises (SMEs) that rely on imported raw materials and components. These groups have called for a phased implementation and for clear guidance from KRA to avoid disruption to supply chains.

Legal experts note that the President’s directive is consistent with the executive’s authority under the Constitution to give policy direction to statutory bodies like KRA. However, they also point out that any change to the benchmark must be formally published in the Kenya Gazette and reflected in the Customs and Excise (General) Regulations. Failure to follow due process could expose the government to legal challenges from affected traders.

Compared with what is normal

Under the previous arrangement, the consolidated cargo benchmark stood at a higher level than KES 2.5 million, meaning that only shipments exceeding that higher threshold were subjected to detailed valuation. The exact former figure varies across different fiscal years, but it has generally been above the new limit, providing a buffer for many importers whose consignments fall just below the higher threshold. By lowering the benchmark, KRA is effectively expanding the pool of shipments that will be examined more closely, increasing the likelihood of duty adjustments.

• Previously, shipments valued between KES 2.5 million and the former benchmark often qualified for simplified assessment, reducing processing time.
• With the new benchmark, the same shipments will now be evaluated on a more granular basis, potentially leading to higher duty assessments.
• The change aligns Kenya’s threshold more closely with regional peers such as Uganda and Tanzania, where similar benchmarks sit around the KES 2‑3 million range.

Why it matters

For Kenyan SMEs that depend on imported inputs, the lowered benchmark translates into a higher probability of duty liability on each shipment. This can affect cash flow, especially for businesses that operate on thin margins and rely on just‑in‑time inventory practices. Increased duties may also lead to higher retail prices for consumers, as manufacturers pass on additional costs.

Logistics firms and freight forwarders will likely see a rise in documentation requirements, as more consignments will need detailed invoices, certificates of origin, and valuation statements. The administrative load could lengthen clearance times at ports such as Mombasa, potentially causing delays in the supply chain. Moreover, the change may influence import decisions, prompting some firms to reconsider sourcing from higher‑cost markets or to explore local alternatives.

Practical steps

• Review recent import invoices and compare the declared values against the new KES 2.5 million benchmark to identify shipments that may now be subject to higher duties.
• Strengthen internal record‑keeping by ensuring that all supporting documents—commercial invoices, packing lists, and valuation reports—are accurate and readily available for customs inspection.
• Engage with your freight forwarder or customs broker early in the shipping process to understand how the benchmark change will affect clearance timelines and costs.
• Consider negotiating payment terms with suppliers that allow for a short grace period to accommodate any additional duty outlays.
• Stay updated on KRA’s official Gazette notices and any subsequent guidance notes that clarify implementation timelines and compliance procedures.

Tax Planning & Compliance services at Beavoren Ventures can help businesses navigate the new cargo benchmark, optimise duty liabilities and ensure that all documentation meets KRA requirements.

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.