KRA's New Policy on cargo tax for Small Traders

The Kenya Revenue Authority (KRA) has announced a new policy that will require small traders to pay taxes per product rather than per kilogram. This change is expected to have a significant impact on the Kenyan economy, both for small businesses and consumers. Let’s explore the official notification in detail:

KRA's New Policy for Small Traders

The Kenya Revenue Authority (KRA) has issued a new policy that will require small traders to pay taxes per product rather than per kilogram. This change is expected to increase the cost of consolidated cargo when multiple goods are imported in a single container.

The KRA says that the new policy is necessary to crack down on tax evasion. Currently, small traders are able to under-declare the value of their imported goods, which allows them to pay lower taxes. By imposing taxes on small traders on a per product basis, the KRA is hoping to make it more difficult for small traders to evade taxes.

However, the new policy is also expected to have a negative impact on small traders. The higher cost of consolidated cargo will make it more difficult for small traders to compete with larger businesses. This could lead to job losses and higher prices for consumers.

The KRA has said that it will provide a grace period of 21 days for small traders to comply with the new policy. However, it is unclear how many small traders will be able to afford to pay the higher taxes.

This will increase the cost of consolidated cargo, which at the moment attracts a duty of Sh200 per kilogram for air cargo or Sh2.2 million for a 40-foot container brought in through the sea.

Here are some key points regarding the KRA's new policy on taxing small traders per product:

• The new policy will generate an additional KES 10 billion in tax revenue.
• The new policy will apply to all small traders, including those who import goods through personal e-declarations (PEDs).
• The KRA will provide a grace period of 21 days for small traders.

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Implications of KRA's New Policy

The KRA's new policy could also have implications for the economy as a whole. Here are some of the potential implications of the KRA's new policy:

Increased cost of living: The higher cost of imported goods could lead to an increase in the cost of living for Kenya citizens. This could be especially difficult for low-income households to sustain a good lifestyle.

Job losses: The higher cost of doing business could lead to job losses in the MSME sector. As a result, it could hurt the economy as a whole.

Inflation: If the cost of imported goods increases, it could lead to inflation. This could make it more difficult for businesses to compete and lead to job losses.

Unfair competition: The new policy could give larger businesses an unfair advantage over smaller businesses. This could lead to less competition in the market and higher prices for consumers.

Conclusion

The KRA's new policy of collecting taxes from small traders is a significant move that could have a major impact on the Kenya economy. The policy is intended to crack down on tax evasion, but it is also likely to have a negative impact on small businesses and consumers.

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