KRA simplifies tax, boosts trade for SMEs with tech, compliance support, and streamlined procedures.
The Kenya Revenue Authority (KRA) has taken significant steps to support Micro, Small, and Medium Enterprises (MSMEs) through simplified tax regimes and streamlined customs procedures. In a recent media engagement, KRA highlighted initiatives designed to promote compliance, reduce costs, and foster growth in the MSME sector.
Supporting MSMEs Through Customs Initiatives
Joakim Mwawasi from KRA’s Customs and Border Control Department outlined the agency’s roles in trade facilitation, including revenue collection, law enforcement, and safeguarding society by regulating prohibited and restricted goods. He explained that MSMEs primarily operate with limited cross-border transactions valued at $2,000 or less, utilizing loose container loads (LCL) or consolidated shipments via land, sea, or air.
To assist MSMEs, KRA has introduced several trade facilitation measures, including simplified trade regimes and consolidated goods clearance. Upcoming innovations include self-clearance solutions for consolidated cargo, automation of Form F88 for baggage clearance, and the establishment of de-consolidation centers.
“These initiatives aim to benefit traders by expanding markets, boosting productivity, enhancing security, reducing costs, increasing revenue, and improving global competitiveness,” Mwawasi said.
Technology and Efficiency in Customs
KRA has implemented programs such as the Authorised Economic Operator Programme (AEOP) to streamline customs procedures and reduce clearance times. Additionally, Pre-Arrival Processing (PAP) ensures faster release of legitimate goods upon arrival.
Other key systems include the Integrated Customs Management System (iCMS), which automates customs declarations, revenue assessments, and payments. The Regional Electronic Cargo Tracking System (RECTS) allows real-time tracking of transit goods, improving accountability and cargo security. Mwawasi noted that RECTS has reduced border congestion, improved turnaround times for transporters, and enhanced trade along the Northern Corridor.
KRA has also installed 33 cargo and baggage scanners to facilitate non-intrusive inspections, further reducing clearance times.
One-Stop Border Posts and Trade Growth
The establishment of seven One-Stop Border Posts (OSBP), including those in Malaba, Busia, and Namanga, has significantly enhanced customs efficiency and revenue collection. These initiatives have improved border crossing speeds, making Kenyan businesses more competitive regionally.
MSMEs are encouraged to share transport resources, such as containers and trucks, to reduce costs. Goods are declared and processed using the iCMS platform, ensuring compliance and accurate tax assessments. Required documents include a simplified certificate of origin, commercial invoices, and relevant permits.
Simplified Tax Regimes for SMEs
Wanja Wangondu from KRA’s Domestic Taxes Department highlighted simplified tax options for MSMEs, including the Turnover Tax (TOT) at 1.5% for businesses with annual revenues of KSh 1–25 million and Monthly Rental Income Tax (MRI) at 7.5% for earnings between KSh 288,000–15 million. Filing and payments can be completed digitally via iTax and M-Service platforms.
To promote compliance, KRA offers voluntary disclosure programs and capacity-building initiatives through partnerships with trade and professional associations. Past efforts, such as waivers on penalties and interest, have bolstered compliance.
Impressive Revenue Growth
In the financial year 2023/2024, KRA recorded an 11.1% growth in revenue collection, amounting to KSh 2.4 trillion, achieving a 95.5% performance rate. These achievements highlight the effectiveness of KRA’s efforts to simplify tax compliance and enhance trade facilitation.