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.
Please note- you will not pay taxes based on how much you paid for your car (purchase invoice) but rather, by the CRSP.
Before we explain how CRSP 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 December 2014 Mazda CX5 but have it arrive in Mombasa in October 2021, this is a bad month and you will pay taxes for the year 2015 (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 of a car by 10% per year (since the year of manufacture) to which then adds the insurance and freight costs to arrive at the customs value.
For instance, if you import a 2014 Mazda CX5, the CRSP price will depreciate by 70%, the year 2015 will depreciate by 60%, 2016 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 is.
The customs value we mentioned will then be subjected to several charges as follows:
- Import duty- 25%
- Excise value- 20% + import duty
- Value added tax – 16% + import duty + excise duty
- IDF (Import declaration fee)-3.5%
- Railway Development Levy-2%
- Additional charges- Marine Levy & Radiation Check
Let us look at a practical example. Let us say you want to import a 2000cc, petrol engine, 2014 Mazda CX5. This is how your import duty will be calculated.
|Current Retail Selling Price||4,495,000.00|
|Import Duty 25%||151,411|
|Excise Duty 25%||189,263.16|
|IDF Fees 3.5%||21,197|
This means the total import duty you will pay for a 2000cc 2014 Mazda CX5 is 525,000kes.
***These figures are meant as a guideline and are not absolute. KRA may change the CRSP without notice.
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
Here is an example of local costs such as the ones mentioned above:
|2000cc 2014 Mazda CX5|
|*These costs are an example and actual costs may vary|
As stated, the above costs are just an example and will vary based on the size of your car, your contract with our agent and other factors. If you decide to transport your car via car carrier, you may end up paying another 20,000-25,000kes. There is also the cost of insurance, and we recommend that you take a comprehensive insurance cover.
Finally, to get a rough estimate of the total cost of your car, add the CIF cost, import duty and local expenses.
If you are looking to import a clean, low mileage vehicle from Japan hassle free, speak to us today!