What happened

President William Ruto announced a directive to consolidate all cargo‑related fees – including handling, storage and clearance charges – into one unified charge effective from the start of the next fiscal quarter. The move is intended to simplify the cost structure for importers and exporters but has immediately placed the Kenya Revenue Authority (KRA) under pressure to re‑engineer its IT platforms, update tax notices and train staff on the new procedure.

Context and background

The cargo fee consolidation stems from a series of policy reviews conducted by the Ministry of Finance over the past two years. Officials noted that fragmented charges often lead to double billing, lack of transparency and disputes at ports such as Mombasa, Lamu and Malindi. In a briefing to the Cabinet in November 2023, the Finance Minister highlighted that a single fee could reduce administrative overhead and improve revenue predictability.

KRA, the agency responsible for collecting customs duties, VAT on imports and other levies, has traditionally managed a matrix of separate fees. Each fee is recorded in distinct ledger codes, requiring importers to submit multiple payments and reconcile receipts. The new directive asks KRA to merge these codes into a single “consolidated cargo fee” (CCF) that will be calculated as a percentage of the declared customs value, plus a flat component for handling.

Stakeholders in the logistics chain – freight forwarders, clearing agents and the Kenya Ports Authority – have voiced mixed reactions. While some welcome the prospect of fewer paperwork requirements, others warn that the transition could cause temporary delays at the border, especially if the IT systems are not upgraded in time. The Business Daily reported that KRA has set up an emergency task force to oversee the rollout, but the agency has not yet released a detailed implementation timetable.

Compared with what is normal

Historically, importers in Kenya have paid between three and five separate fees when clearing cargo, each with its own invoicing schedule. The average total cost of these fees ranges from 2% to 4% of the cargo’s CIF (cost, insurance, freight) value, depending on the port and the type of goods. Under the proposed CCF, the fee is expected to be a single rate of roughly 3% of CIF, plus a flat Sh10,000 handling charge for containers over 20 feet. This represents a modest reduction for high‑value shipments but could increase costs for low‑value consignments that previously benefited from lower individual fees.

• Current practice: 3‑5 distinct fees, total 2‑4% of CIF.
• Proposed CCF: single rate ~3% of CIF + fixed Sh10,000 handling.
• Implementation gap: KRA’s systems need at least 90 days to re‑configure.

Why it matters

For Kenyan SMEs that rely on imported raw materials, the consolidation could affect cash‑flow planning. A single fee means that businesses will see the total cost of clearance on one invoice, making budgeting simpler but also exposing them to a larger upfront outlay if the flat handling component is significant relative to their shipment size. Larger firms may benefit from reduced administrative time, but they will need to adjust their ERP systems to capture the new fee structure.

The change also has macro‑economic implications. By streamlining revenue collection, the government hopes to close gaps that lead to revenue leakage, potentially boosting customs revenue by an estimated 5% to 7% annually, according to Finance Ministry projections. However, any delay in KRA’s system upgrade could lead to bottlenecks at the ports, increasing dwell time for containers and raising indirect costs for the entire supply chain.

Importers should also be aware of compliance risks. Until the new fee schedule is officially published in the Kenya Gazette, any premature charging of the CCF could be challenged in tax courts. Moreover, the consolidation may affect the calculation of input VAT, as the single fee will be subject to VAT at the standard rate of 16%.

Practical steps

• Review current cargo fee invoices and map each charge to its corresponding ledger code; this will ease the transition to the single fee.
• Engage with your customs broker or clearing agent to confirm that they have received the latest guidance from KRA and are preparing system updates.
• Adjust budgeting templates to reflect a single consolidated fee, incorporating both the percentage component and the flat handling charge.
• Monitor KRA’s official communications, especially notices published in the Kenya Gazette, for the exact effective date and any transitional relief measures.
• Consider a short‑term cash‑flow buffer of at least 10% of expected cargo fees to cover any unexpected timing gaps during the rollout.

Beavoren Ventures offers a Tax Planning & Compliance service that can help SMEs navigate the new consolidated cargo fee, ensuring accurate reporting and optimal cash‑flow management.

Talk to our team at Beavoren Ventures — info@beavorenventures.co.ke — to set up your systems correctly.

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.