What happened

The Kenya Revenue Authority (KRA) recently seized 52 refurbished mobile phones and three commercial drones during a routine cargo inspection at Jomo Kenyatta International Airport (JKIA). The operation, carried out by customs officers and the anti‑smuggling unit, resulted in the devices being held in a secure storage area pending further investigation. KRA officials said the items appeared to be declared at values that were significantly lower than market rates, raising concerns about possible under‑invoicing. Importers who had lodged the shipment are now required to provide additional documentation to prove the legality of the goods. The seizure underscores the authority’s renewed focus on electronic imports, a sector that has grown rapidly in Kenya over the past few years.

Context and background

KRA’s customs division has been intensifying checks on electronic goods following a series of high‑profile cases where under‑declared shipments led to revenue losses estimated in the hundreds of millions of shillings. In 2022, the agency introduced a new valuation framework for refurbished devices, mandating that importers use the average market price published by the Kenya Bureau of Standards (KEBS) as a benchmark. The framework was designed to curb the practice of declaring refurbished phones at the price of new units, which can distort competition and deprive the government of due tax. The recent seizure aligns with that policy, showing that the agency is willing to act when discrepancies are identified.

The three drones involved were listed as “accessories for agricultural use” in the import paperwork, but customs officers noted that the serial numbers matched models typically sold for aerial photography and commercial surveying. Drones have become a hot import item for both private enterprises and government projects, especially in precision agriculture and infrastructure monitoring. Because drones are classified under the Kenya Civil Aviation Authority’s (KCAA) regulatory regime, they attract both import duty and an air‑worthiness levy, which must be reflected in the customs declaration.

Importers of refurbished electronics often source their stock from overseas markets such as China, the United Arab Emirates and Turkey. These devices are usually sold at a discount compared with brand‑new phones, but they still retain considerable resale value in the Kenyan market. The KRA’s crackdown is partly driven by reports that some traders have been using “split‑invoice” tactics—issuing a low‑value invoice for customs clearance and then selling the devices at a higher price domestically. Such practices not only erode tax revenue but also create an uneven playing field for businesses that comply with the law.

For the affected businesses, the immediate consequence is the immobilisation of inventory worth an estimated Sh30 million, based on average market prices for refurbished smartphones and mid‑range drones. While the exact amount will be confirmed after a valuation exercise, the financial hit can be significant for small and medium‑size enterprises (SMEs) that operate on thin margins. KRA has indicated that owners will be given a 14‑day window to submit the required paperwork; failure to comply could result in the goods being auctioned off, with proceeds directed to the national treasury.

Compared with what is normal

Historically, KRA’s seizure rates for electronic goods have hovered around 2‑3 % of total shipments, according to the authority’s annual customs report for 2023. The current incident, involving 55 items in a single consignment, represents a higher concentration than the average, suggesting that the agency is targeting larger batches that appear to be systematically undervalued. In the same period last year, the number of drones seized at JKIA was only one, making the three‑drone seizure a notable increase.

• Average customs duty on new smartphones: 25 % of CIF value; refurbished phones: 20 %.
• Typical valuation gap for under‑declared refurbished phones: 30‑40 % below market price.
• Standard processing time for seized goods: 30‑45 days, but KRA has expedited the current case to 14 days for compliance verification.

Why it matters

For Kenyan SMEs that import electronic devices, the seizure sends a clear signal that non‑compliance will be met with swift enforcement. Under‑invoicing not only leads to lost revenue for the government but also creates distortions in the local market, where legitimate traders may find it harder to compete on price. The loss of inventory can disrupt cash flow, especially for businesses that rely on quick turnover of refurbished phones to meet consumer demand. Moreover, the incident highlights the need for accurate record‑keeping and transparent valuation methods, as KRA now has the capacity to cross‑check invoices against market databases.

The broader economic impact extends to consumers as well. If importers face higher compliance costs or delayed shipments, retail prices for refurbished phones and drones could rise, reducing affordability for many Kenyans. Additionally, the enforcement action may influence foreign suppliers to tighten their own export documentation, potentially slowing the supply chain. On the positive side, stricter compliance can improve the overall quality of goods entering the country, reducing the risk of sub‑standard or counterfeit devices reaching end users.

Practical steps

• Review all recent import invoices for refurbished electronics and ensure the declared value aligns with KEBS market price guides.
• Gather supporting documents such as purchase orders, pro‑forma invoices, and bank payment records to substantiate the declared values.
• Contact KRA’s customs liaison office within the 14‑day window to clarify any discrepancies and avoid the auction of seized goods.
• Consider engaging a customs broker or tax adviser to conduct a pre‑clearance valuation check before future shipments.

Tax Planning & Compliance services at Beavoren can help SMEs of customs valuation, prepare accurate documentation and mitigate the risk of future seizures.

Book a consultation with Beavoren Ventures today and let us handle your compliance, books, and advisory in one place.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.