If you are planning to import a car from Japan, the UK, or elsewhere, one of your biggest concerns will be the cost. There is the actual cost of buying the vehicle, often referred to as CIF (Cost, Insurance & Freight) in import lingo. Basically, this covers the value of the car to the port of Mombasa. This part is easy to understand, but it is the second part that most people find complicated and even confusing- import taxes.
How exactly do import agents arrive at the taxes payable? In this article, we will break down exactly how car import taxes in Kenya are calculated.
The Kenya Revenue Authority (KRA) is the body tasked with determining how much taxes you pay for importing a car, and to whom these taxes are paid.
KRA uses what is called a Current Retail Selling Price (CRSP), a database that lists the showroom (brand-new) costs of various models of cars. The CRSP prices are what form a basis of taxing second-hand imports based on a depreciation model.
Before we explain how depreciation works, it is important to note that other factors will affect the total cost of a used car. These include:
- Make- e.g., Subaru, Toyota, Nissan
- Model- e.g., Forester, Prado, Juke
- Year and month of manufacture, e.g., Nov 2014
- Engine transmission- e.g., automatic, manual
- Engine capacity-e.g. 1600cc, 1800cc, 2000cc
- Fuel type- e.g., petrol, diesel
- Class – e.g., wagon, hatchback, sedan
**What is a bad month?
As noted above, the month and year of manufacturer/ registration is crucial in determining taxes payable. The month, particularly, is something that you should pay attention to as there is what is called ‘a bad month’.
A bad month refers to importing a vehicle and having it arrive in Mombasa before its month of manufacturer or registration for the year in question. For example, if you buy a November 2013 Toyota Fielder but have it arrive in Mombasa in October 2020, this is a bad month and you will pay taxes for the year 2014 (which are higher). It is therefore important to consult with your import agent to ensure that you get the right car.
KRA depreciates the CRSP price by 10% per year (since its year of manufacture) to which then adds the insurance and freight costs to arrive at the customs value.
For instance, if you import a 2013 Toyota Fielder, the CRSP price will depreciate by 70%, the year 2014 will depreciate by 60%, 2015 by 50%, and so forth. This means that unlike other countries, in Kenya, the older a car is, the cheaper it is, and the newer a vehicle is, the more expensive it will be.
The customs value we mentioned will then be subjected to several charges as follows:
- Import duty- 25%
- Excise duty- 20% + import duty
- Value added tax – 16% + import duty + excise duty
- IDF (Import declaration fee) & Railway Development Levy-2.25% and 1.5% respectively
- Additional charges- Marine Levy & Radiation Check
***Please note that sometimes KRA may issue slightly differing figures from what your import agent gives you***
Other Importation Costs
Now that you have an idea of how KRA arrives at taxes, it is time to look at other costs that you will incur at the port of Mombasa. These include:
- Port charges– This is paid to the CFS (container freight station) where your car is being stored and varies based on the size of your vehicle
- Shipping– This is paid to the shipping line that shipped your car
- Registration fee– Paid to NTSA for registration & physical plates
- Import agency fee– This is the fee agreed upon with your import agent for handling the whole import process on your behalf.
- Clearance fees– Fees paid to the clearing & forwarding company that will clear your car from the port
- Transportation to your location (either by road or car carrier)- You can choose to drive your car/ have it driven from Mombasa or use a car carrier
- Insurance– This will be issued by your preferred insurance agent
If you are looking to import a clean, low mileage vehicle from Japan hassle free, speak to us today!