Motoring: A breakdown of vehicle importing charges and taxes

Some imported vehicles as seen at Canon Motors in Mombasa. [Omondi Onyango, Standard]

Car dealers in Kenya have raised concern over continued dead stock as a result of the increased taxes by the Kenya Revenue Authority (KRA), making it harder for buyers to afford their preferred vehicles - whether new or second-hand.

The East African Community (EAC) in 2023 approved an application by Kenya to raise the duty on motor vehicles under the common external tariff from 25 percent to 35 percent, changes that were effected on July 1, 2023. The situation was worsened by the shilling depreciating against the dollar.

This also explains the sudden influx of motor vehicles on Kenyan roads bearing South Sudan, Ugandan, or Tanzanian number plates.

Most motorists find it cheaper to import their cars from the aforementioned countries whose tax bracket is friendlier compared to the local ones.

For one to successfully import a car from overseas, various steps have to be adhered to including the age limit of the car which should not be more than eight (8) years from the year of manufacture which is the year when the car was first registered.

After identifying your preferred vehicle, and settling with the seller on shipping, once the car lands at the port of Mombasa, one has to clear it through the tax man.

Procedures for clearing a car

The buyer has to contract a licensed clearing agent to process the declaration in the KRA system.

One needs to be careful not to use proxies or quacks to clear their car. The list of all the licensed clearing agents by the government is available online through the KRA portal.

Once you engage your preferred agent, he or she will lodge an import entry in the system and then proceed to pay the required duties and taxes before presenting all the documentation for Customs to pass the entry.

It is then that the taxman will inspect the car to ensure that it meets the Kenya Bureau of Standards (KEBS) KS 1515:2000 – Code of Practice for Inspection of Road Vehicles before clearance. 

Under the Code of Practice, a car that has surpassed the age limit of more than 8 years will not be allowed into the country. It is also important to note that left-hand drive vehicles are not allowed for registration unless for special purposes. Lastly, the car must be inspected physically to prove its roadworthiness.

How the car duty is calculated

The Current Retail Selling Price (CRSP) of your vehicle is provided by KRA.

The customs officials then compare the actual invoice value of the car and the CRSP provided and will use the higher of the two to proceed with calculations.

The customs value is then calculated by applying the depreciation to the CRSP value. The Excise Duty, Import Duty, Value-added tax (VAT), and the Import Declaration Form (IDF) Fee are all calculated from the customs value.

According to KRA, Import Duty is calculated at 35 percent of the Customs Value while the Excise Duty is 20 percent of the Customs Value plus the import Duty.

“Value-Added Tax is 16 percent of the Customs Value Plus Import Duty and Excise Duty," KRA explains on its official website.

On the other hand, the Import Declaration Form (IDF) fee is 3.5 percent of the Customs Value while the Railway Development Levy (RDL) is calculated at 2 percent of the Customs Value.

How a car’s age affects calculations

The depreciation for direct imports into the country varies depending on the age of the car. It is key to note that one cannot import a vehicle over eight years old. That means the cut of 2024 is a 2017 maximum age.

A brand-new car that is less than six months old will attract a five (5) percent depreciation for direct imports while a 7 to 8-year-old car will attract 70 percent of the same bracket.

It is also key to note that one will incur other charges that will roughly be slightly above Sh170,000 on top of the KRA duties and taxes.

Additional charges for importing a car

Import Declaration Form (IDF) one will part with Sh2,000, a radiation fee of Sh1,000, Interpolice fee of Sh15,000, Port charges and Standard Gauge Railway- Sh120,000, Verification fees- Sh15,000, National Transport and Safety Authority (NTSA) sticker-Sh800 and agent fees of not less than Sh100,000.

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