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.
To a small trader, it can be the difference between a profitable shipment and an unviable one; both perspectives deserve to be heard.Let us begin with something that is sometimes lost in the heat of tax debates: KRA has a legitimate enforcement problem.
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