Tax Breakdown: Cost of Importing a Sh2.3M Vehicle to Kenya
Many Kenyans aspire to own a vehicle, whether a brand-new car or a reliable second-hand option. Understanding the importation process is key to ensuring a seamless transaction.
The vehicle import process involves several steps, such as adhering to regulatory standards, hiring a licensed clearing agent, and handling various duties and taxes.
To successfully clear a vehicle through Kenya Customs, it is necessary to enlist the services of a licensed clearing agent, who will oversee the entire process.
The clearing agent’s duties include submitting an import entry in the Kenya Revenue Authority (KRA) system, paying the necessary taxes and duties, and providing all required documents for customs clearance.
Vehicle Standards Compliance
Before clearance, the imported vehicle must comply with the Kenya Bureau of Standards KS 1515:2000 – Code of Practice for Vehicle Inspection. The main factors considered are:
- Age Limit: The vehicle must be no older than 8 years from the year of manufacture, or first registration.
- Left-Hand Drive Restriction: Left-hand drive vehicles cannot be registered unless they serve special functions, such as ambulances or fire trucks, or are part of government-donated projects like large construction vehicles.
- Roadworthiness: All second-hand vehicles imported to Kenya must pass inspections to meet roadworthiness, safety, and additional requirements.
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Taxes and Duties Involved
Importing a vehicle into Kenya comes with several taxes and duties:
- Import Duty: 35% of the Customs Value (CIF), which includes the vehicle’s invoice value, insurance, and freight costs.
- Excise Duty: This depends on engine size:
- 20% for engines up to 1,500 cc
- 25% for engines above 1,500 cc
- 35% for engines over 3,000 cc
- VAT (Value-Added Tax): 16% of the sum of customs value, import duty, and excise duty.
- Rail Development Levy: 2% of the Customs Value (CIF).
- Import Declaration Fee (IDF): 3.5% of the Customs Value (CIF).
Cost Breakdown Example
Here’s a sample breakdown of duties and taxes for an 1800 cc vehicle, manufactured in January 2017:
- Current Retail Selling Price (CRSP): Sh2,355,704
- Cost Insurance and Freight (CIF): Sh623,855.40
- Import Duty (35%): Sh218,349.39
- Excise Duty (25%): Sh194,954.81
- VAT (16%): Sh155,963.85
- IDF Fee (3.5%): Sh21,834.94
- Rail Development Levy (2%): Sh12,477.11
In total, the payable duties for this vehicle amount to Sh603,780.10.
Tax Breakdown: Cost of Importing a Sh2.3M Vehicle to Kenya
