Several businesses shut in Nairobi CBD ahead of planned traders' protests

Several businesses shut in Nairobi CBD ahead of planned traders' protests/screengrab

Several businesses in Nairobi’s Central Business District remained closed on Friday morning as traders prepared for planned demonstrations over taxation and changes to customs valuation.

The closures were reported in parts of the CBD as traders raised concerns over the rising cost of doing business and the impact of changes introduced by the Kenya Revenue Authority (KRA).

However, business activity continued normally in other parts of the city, with areas such as Eastleigh appearing largely peaceful and shops operating as usual by mid-morning.

Police officers were also stationed outside Times Tower, which houses KRA offices, amid preparations for the planned demonstrations.

In a video seen by The Star, several security personnel were spotted outside the building, with some carrying batons.

The demonstrations are linked to concerns over KRA’s decision to increase the Customs Minimum Benchmark for consolidated cargo from Sh2.5 million to Sh3.2 million.

Some small-scale traders have raised concerns that the higher benchmark could increase the cost of clearing imported goods and further squeeze their profit margins amid rising operating expenses.

The planned protests came hours after KRA issued a clarification on the consolidated cargo arrangements, seeking to address concerns raised by traders.

KRA said the Sh3.2 million minimum yield should not be interpreted as the actual tax payable on every container.

“It is important to emphasise that the minimum yield is not a representation of the actual tax liability for the goods contained in a container,” the authority said.

The revenue authority explained that the actual customs liability is determined by factors including the nature, value and classification of the goods.

KRA added that the minimum yield test is intended to provide a faster and more predictable clearance process for small-scale traders who consolidate their goods.

The authority said the benchmark was last revised in the 2022/23 financial year before the latest review.

KRA attributed the review to changes in the operating environment, including fluctuations in exchange rates, freight charges and changes in national and East African Community tax laws.

Despite the clarification, a section of traders proceeded with plans for demonstrations, with some businesses closing ahead of the planned action.

KRA has maintained that traders have alternatives if they do not wish to use the simplified clearance arrangement.

“A trader may opt out of the simplified trade facilitation arrangement and request Customs to verify their container and determine the applicable taxes based on the actual contents, their correct customs value and proper classification,” KRA stated.

Traders can also de-consolidate their cargo into individual consignments, allowing importers to make separate declarations and pay the applicable taxes directly to KRA based on their goods.

The authority said the options were intended to balance trade facilitation with the protection of government revenue.

As of mid-morning, it remained unclear whether the planned demonstrations would fully take off across the city, with some businesses closed while commercial activity continued in other areas.

Should the protests proceed, traders are expected to push their concerns over taxation, customs valuation and the broader cost of doing business.