KRA’s Sh3.2m benchmark: Are we taxing non-compliance, or small business?

When traders close their shops and take to the streets over a customs valuation decision, we should resist the temptation to reduce the debate to the familiar argument of taxpayers versus the taxman. There is a much bigger question at stake. How should Kenya enforce tax compliance without making legitimate enterprise increasingly difficult to sustain?

The controversy surrounding the Kenya Revenue Authority (KRA)’s revised customs benchmark for general consolidated cargo provides an important test. KRA has increased the minimum benchmark for a 40-foot container of general consolidated cargo from Sh2.5 million to Sh3.2 million, a 28 per cent increase. To the tax administrator, this is principally a customs risk-management intervention.