A new requirement for importers to provide certificates of origin could clog the port without catching rogue traders who undervalue goods to pay low taxes, the Parliamentary Budget Office (PBO) has warned.
PBO notes that while making it mandatory for importers to have the document before goods can be processed by customs offers assurance on where that have been sourced, the government has not proved how the requirement will curb undervaluation.
In the Finance Act, 2025, the government amended the Tax Procedures Act making it mandatory for importers to have certificates of origin issued by a competent authority in the exporting country and now the Kenya Revenue Authority (KRA) must first verify the document before processing imports.
Enforcement of the certificates of origin commenced in October.
“The mandatory certificate of origin requirement is designed to curb undervaluation and improve customs compliance, but its success will depend heavily on enforcement. If poorly managed, it could create delays at ports and increase bureaucracy without solving the problem,” the office says.
In a report analysing the government’s budget implementation for the current fiscal year, the PBO is calling on the government to keep an eye on customs clearance times to tell if the policy will affect efficiencies at the port.
The office also observes that to measure its impact, a growth in import duty collections will signify increased compliance among importers.
“To measure its impact, it will be necessary to keep an eye on customs clearance times, which reflect efficiency. The share of consignments flagged for undervaluation will show if enforcement is improving,” the PBO says.
KRA has for years concentrated on deployment of advanced scanning technologies at ports of entry to nab tax evaders, though the strategy has not been impactful in cargo valuation.
The PBO observes that resistance to policy changes and new technologies from stakeholders has been one of the main challenges for KRA, in dealing with undervaluation of imports.
Last year, Kenya imported goods valued Sh2.7 trillion, KNBS reported.
“However, the accurate valuation of import cargo continues to face major challenges, primarily due to widespread undervaluation of goods. High-value commercial and excisable goods are often declared at artificially low values, making accurate valuation difficult and leading to substantial revenue losses,” the PBO says.
The amendment gave KRA powers to seize goods that lack the certificate of origin.
The PBO reckons that the deeper challenge for the government lies in enforcing strict verification and ensuring that declared values truly reflect market realities, rather than merely asking for the certificate of origin.
“The mere presence of a certificate of origin does not necessarily guarantee accurate cargo valuation, as importers may still declare lower values despite presenting the correct origin documentation,” it says.
The office notes that the real challenge is for the government to address underlying issues such as resistance to new policies and technologies, potential corruption, or lack of proper compliance incentives.
“It will be critical to observe whether this measure leads to an increase in revenue collection and effectively curbs revenue losses arising from undervaluation. Only time will tell if this legislative change solves the long-standing problems or simply reinforces existing challenges under a new legal framework,” the PBO says.
