One of the most misunderstood aspects of importing into Kenya is customs valuation. Many importers are surprised when KRA assesses a higher value than expected—leading to higher duty, VAT, and penalties.
In this article, we explain how customs valuation works in Kenya, what KRA looks at, common mistakes importers make, and how Clearon Logistics helps clients avoid costly valuation disputes.
What Is Customs Valuation?
Customs valuation is the process used by Kenya Revenue Authority (KRA) to determine the customs value of imported goods, which forms the basis for calculating:
- Import duty
- VAT
- IDF (Import Declaration Fee)
- RDL (Railway Development Levy)
The valuation is done under WTO Customs Valuation Agreement, which Kenya follows.
The Primary Method: Transaction Value
What KRA Uses First
KRA primarily uses the Transaction Value Method, which is based on:
The actual price paid or payable for the goods, plus certain additions.
This includes:
- Cost of the goods
- Freight
- Insurance
- Commissions (if applicable)
Example:
If you import goods costing USD 10,000, freight is USD 1,500, and insurance is USD 200, then:
Customs Value (CIF):
USD 10,000 + 1,500 + 200 = USD 11,700
All taxes are calculated from this CIF value.
When KRA Rejects the Transaction Value
KRA may reject your declared value if:
- The invoice appears undervalued
- The supplier is related to the buyer
- Documents are inconsistent
- Prices are significantly below market value
When this happens, KRA moves to secondary valuation methods.
Secondary Customs Valuation Methods
If transaction value is rejected, KRA applies the following methods in order:
1. Identical Goods Method
KRA compares your goods to identical imports recently cleared.
2. Similar Goods Method
Used when identical goods are unavailable.
3. Deductive Value Method
Based on local resale price minus costs and profit.
4. Computed Value Method
Uses cost of production, profit, and expenses.
5. Fallback Method
Uses reasonable means consistent with WTO rules.
Common Customs Valuation Mistakes Importers Make
1. Under-declaring Invoice Values
Importers sometimes reduce invoice values to lower tax—this often leads to:
- Valuation queries
- Delays
- Penalties
2. Excluding Freight or Insurance
KRA always adds freight and insurance, even if not shown on the invoice.
3. Using Proforma Invoices Instead of Commercial Invoices
Proformas are not accepted for final valuation.
4. Inconsistent Documents
Mismatch between invoice, packing list, and BL triggers scrutiny.
Example of a Valuation Dispute
An importer declared electronics valued at USD 8,000, but similar goods previously cleared were valued at USD 11,000.
KRA:
- Rejected the declared value
- Applied identical goods valuation
- Increased taxes by over KES 450,000
- Delayed clearance by 6 days
Clearon Logistics helps prevent this by pre-validating values and HS codes before entry submission.
How Customs Valuation Affects Import Costs
Higher valuation means:
- Higher import duty
- Higher VAT
- Higher IDF & RDL
Even small valuation differences can cause significant tax increases.
This is why accurate valuation is critical to cost control.
How Clearon Logistics Helps With Customs Valuation
At Clearon Logistics, we:
- Review supplier invoices for compliance
- Verify HS codes and market values
- Advise clients before shipment
- Defend declared values using proper documentation
- Minimize valuation disputes and delays
Our goal is accurate declaration, not shortcuts that cause problems later.
Why Professional Guidance Matters
Customs valuation is not just about declaring a price—it’s about:
- Compliance
- Accuracy
- Risk management
Mistakes can cost importers time, money, and credibility with KRA.
Working with experienced professionals ensures smooth clearance and predictable costs.
Final Thoughts
Understanding customs valuation in Kenya helps importers:
- Avoid disputes
- Control costs
- Clear goods faster
With Clearon Logistics, importers get step-by-step guidance, accurate declarations, and peace of mind throughout the clearance process.
If you’re planning an import and want to avoid valuation issues, our team is ready to help.
Leave a Reply