A growing dispute between small traders and the Kenya Revenue Authority (KRA) is putting fresh pressure on businesses that depend on imported goods.
Traders say new import valuation rules are leaving them with tax bills far above what they expected, raising fears that some businesses could struggle to survive.
One example being cited involves a businessperson who bought ordinary goods in Guangzhou for about KSh700,000.
The shipment includes items such as hoods, plates and other small stocks commonly sold in Kenyan shops. However, after the container arrived at the Port of Mombasa, the value used for tax purposes was reportedly placed at KSh3.2 million.
According to the traders, the figure was previously around KSh2.5 million but was raised to KSh3.2 million from August 20. This means the tax calculation is no longer closely matching what the importer actually paid for the goods.
At a 25 per cent duty rate, KSh3.2 million attracts KSh800,000 in duty alone. Other charges, including the Import Declaration Fee and railway levy, are then added based on the assessed value. Traders say the total tax bill can reach about KSh2.2 million, despite the goods having been purchased for only KSh700,000.
Once port charges, storage and other costs are included, some importers say their total bills can rise to millions of shillings. For small traders who borrowed money to finance their shipments, such costs can quickly turn a potentially profitable business into a loss.
KRA has offered traders the option of having their cargo deconsolidated and assessed item by item. However, traders argue that this process can take too long, leaving goods at the port while storage and demurrage charges continue to accumulate.
This has become a major concern for businesses already dealing with high operating costs. Transport, electricity, rent and compliance expenses have continued to put pressure on small and medium-sized enterprises. Traders now say import valuation is adding another burden.
The issue also raises questions about fairness. KRA has a responsibility to collect taxes and prevent under-declaration, but traders argue that valuations should reflect genuine transaction prices where proper invoices and supporting documents are available.
If legitimate businesses are forced to pay taxes based on values far above what they actually paid, the impact may eventually reach consumers through higher prices. Some traders could also reduce their imports or leave the formal market altogether.
The government has repeatedly spoken about supporting businesses and creating jobs. For that message to have meaning, traders say revenue collection must also allow businesses to remain viable.
KRA may need to address these concerns openly and explain how the new valuations are determined. For small traders, the issue is no longer simply about paying tax. It is about whether they can continue importing, selling goods and keeping their businesses running.
