Are you thinking about importing a car to Kenya and wondering about the cost? You’re in the right place. The journey of bringing a foreign-used car into the country has gotten a bit more complicated with recent updates in regulations and taxes.
Whether you’re eyeing your dream car or simply need a reliable vehicle, getting a clear picture of the cost of importing a car to Kenya is essential. From navigating the Kenya Revenue Authority (KRA) regulations to understanding the tax implications, there’s quite a bit to consider. But don’t stress—we’re here to simplify things for you.
This guide is designed to walk you through the costs involved in importing a car to Kenya, making your decision-making process a little easier. Let’s unpack the expenses and requirements to help you bring home that car without any surprises.
Understanding Import Duties and Taxes
When you’re looking to import a car into Kenya, one of the first things you’ll encounter is the array of duties and taxes imposed by the Kenya Revenue Authority (KRA). These are not just numbers but crucial factors that significantly influence the overall cost of importing a car to Kenya. Let’s break down these costs to make them easier to understand and navigate.
The Role of Import Duty
Import duty is essentially the tax imposed on goods brought into the country. For cars, this duty has seen a notable increase from 25% to 35%, a change approved by the East African Community (EAC) to harmonize tax policies across member states.
While this aims to support regional economic goals, it also means that the dream of owning an imported car has become more expensive for the average Kenyan consumer. This increase directly impacts the cost of importing a car to Kenya, making it essential for potential importers to factor this into their budget.
Why the Increase?
The decision to raise the import duty on foreign-used cars to 35% is part of a broader strategy to encourage the purchase of locally-used vehicles and reduce the influx of older foreign cars. This policy is not only about economics but also about environmental considerations, aiming to reduce pollution by limiting the number of older vehicles on Kenyan roads.
Calculating the Cost of Importing a Car to Kenya
When you decide to import a car into Kenya, understanding the breakdown of costs is crucial. The total expense is not just about the purchase price; it includes a variety of duties and taxes mandated by the Kenya Revenue Authority (KRA). Here’s a closer look at each component to help you calculate the overall cost effectively.
Import Duty
The import duty is a significant portion of the costs involved in bringing a car to Kenya. It’s calculated as 35% of the Customs Value (CIF), which is a combination of the invoice value of the car, insurance, and freight charges. This rate was increased from 25% to 35% to align with regional economic policies and to encourage the purchase of locally-used vehicles.
Excise Duty
Excise duty is another critical cost, levied based on the engine capacity of the vehicle:
- For vehicles with an engine capacity of 1500 cc and below, the excise duty is 20%.
- Vehicles with an engine capacity above 1500 cc are charged an excise duty of 25%.
This duty is applied to encourage the use of smaller, more fuel-efficient, and environmentally friendly vehicles.
Value Added Tax (VAT)
VAT is charged at 16% and is applied to the cumulative total of the Customs Value, Import Duty, and Excise Duty. This tax is part of the government’s standard taxation policy and applies to most goods and services, including imported vehicles.
Rail Development Levy (RDL)
The Rail Development Levy is charged at 2% of the CIF value. This levy is part of the government’s initiative to fund rail infrastructure development in Kenya, which benefits the overall economy and transportation network.
Import Declaration Fee (IDF)
The Import Declaration Fee is set at 3.5% of the CIF value. This fee is paid at the time of declaring the vehicle for importation into Kenya and is used to process the importation paperwork and formalities.
Example Calculation
To put these components into perspective, let’s consider importing a Toyota Auris with an 1800 cc engine manufactured in 2017. Assuming the CIF value of the car is $10,000, the breakdown of costs would be as follows:
- Import Duty: 35% of $10,000 = $3,500
- Excise Duty: 25% (since the engine is above 1500 cc) of ($10,000 + $3,500) = $3,375
- VAT: 16% of ($10,000 + $3,500 + $3,375) = $2,780
- Rail Development Levy: 2% of $10,000 = $200
- Import Declaration Fee: 3.5% of $10,000 = $350
Adding these figures together gives a total tax and duty cost of $10,205, effectively more than doubling the CIF value of the car.
Additional Costs to Consider
When importing a car to Kenya, the financial considerations extend beyond the primary taxes and duties outlined by the Kenya Revenue Authority (KRA). Several additional costs can significantly impact the total expense of bringing a vehicle into the country. Understanding these extra charges is essential for a comprehensive budget and avoiding any surprises during the importation process.
Port Charges
Once your vehicle arrives in Kenya, it incurs port charges. These fees are for the handling and storage of your car at the port of entry, typically Mombasa. The charges vary depending on how long your vehicle stays at the port before clearance. Quick clearance can help minimize these costs, but delays, often due to paperwork or payment issues, can lead to increased charges.
Verification Fees
Verification fees are charged for the inspection of your vehicle to ensure it meets Kenya’s standards for roadworthiness, safety, and environmental compliance. This inspection is mandatory and is conducted by the Kenya Bureau of Standards (KEBS) or an appointed agent. The fee covers the cost of verifying that your vehicle adheres to the stipulated regulations, including the age limit and condition requirements.
Interpol Fees
To combat the importation of stolen vehicles, Kenya requires an Interpol clearance for all imported used vehicles. This fee is paid for the service of checking the vehicle against international databases to ensure it has not been reported stolen anywhere in the world. This step is crucial for protecting buyers and maintaining the integrity of the Kenyan automotive market.
Customs Clearance Agent Fees
Hiring a customs clearance agent is almost a necessity for navigating the complex process of importing a vehicle into Kenya. These agents charge fees for their services, which include preparing and submitting the necessary documentation, paying the duties and taxes on your behalf, and ensuring that your vehicle clears customs without unnecessary delays. Their expertise can save you time and potentially money, but their fees will add to your overall costs.
Marine Insurance
While not always mandatory, purchasing marine insurance for your vehicle during transit is highly recommended. This insurance protects you against the loss or damage of the vehicle while it is being shipped to Kenya. Considering the value of the vehicle and the potential risks involved in international shipping, marine insurance offers peace of mind for a relatively small investment.
Local Transportation and Registration Costs
After your vehicle has cleared customs, you’ll need to transport it from the port to your location. This transportation cost depends on the distance and the type of vehicle. Additionally, you’ll incur expenses related to registering the vehicle in Kenya, including obtaining Kenyan license plates and a logbook in your name. These registration costs are separate from the importation taxes and duties.
Planning Your Budget
Given these additional expenses, it’s clear that the cost of importing a car to Kenya involves more than just paying taxes and duties. Importers should carefully budget for these extra charges to ensure a smooth and cost-effective importation process. Consulting with experienced customs agents and using available online resources can help you estimate these costs more accurately and prepare adequately for the financial commitment of importing a vehicle.
The Impact of Increased Import Duty
The decision to increase the import duty on cars to 35% marks a significant shift in Kenya’s automotive market landscape. This adjustment not only aligns Kenya with its East African Community (EAC) counterparts’ economic policies but also significantly affects Kenyan consumers.
Compared to neighboring countries like Uganda and Rwanda, where import duties are capped at 15% and 25% respectively, Kenya’s higher rate places a substantial financial burden on those looking to import foreign-used cars. This discrepancy can make Kenya a less attractive market for imported vehicles, potentially reducing the variety and availability of foreign-used cars.
The direct consequence of this hike is a notable increase in the cost of foreign-used cars, with prices expected to surge by approximately 14%. This price inflation impacts not just the initial purchase cost but also affects the overall affordability of owning and maintaining a vehicle in Kenya, considering the cumulative effect of taxes, duties, and additional fees.
Alternatives to Importing Foreign-Used Cars
In light of these rising costs, Kenyan car buyers are increasingly looking towards the local used car market. Locally-used cars offer a more economical alternative, free from the burdensome import duties that inflate the prices of foreign-used vehicles. This shift not only has the potential to save buyers money but also supports the local automotive industry, encouraging a sustainable cycle of car ownership and resale within the country.
Benefits of Buying Locally-Used Cars
- Cost Savings: The most immediate benefit of opting for a locally-used car is the significant cost savings. Without the added weight of import duties and international shipping fees, buyers can find better deals on vehicles that are already in Kenya.
- No Need for Modifications: Imported vehicles, especially those from countries with left-hand drive configurations, require costly modifications to comply with Kenya’s right-hand drive standards. Locally-used cars, already adapted to local regulations, eliminate this need, saving buyers additional expenses and hassle.
- Faster Acquisition: The process of importing a vehicle can be lengthy, involving shipping, customs clearance, and registration. Buying a locally-used car simplifies this process, allowing buyers to take possession of their vehicles much more quickly.
- Supporting Local Economy: Purchasing locally-used cars contributes to the domestic economy, supporting local dealerships, mechanics, and the broader automotive service industry.
Smarter Ways to Own Your Dream Car in Kenya
Bringing a car into Kenya has gotten pricier, thanks to higher import duties and all the extra taxes and charges that come with it. For those thinking about getting a foreign-used car, these rising costs mean you’ve got to think twice and really crunch the numbers. But there’s a silver lining – turning to cars already in Kenya could be your wallet’s best friend. It’s a move that could save you a lot of hassle and money.
Understanding what you’ll need to pay before making a decision is key. This way, you can pick a car that fits your budget and likes without any surprises. And remember, whether you’re importing a car or buying one locally, making your ride feel like yours is what matters at the end of the day.
That’s where Ignition Covers Kenya comes in. We’re all about adding that personal touch to your car with our range of interior accessories. From backseat organizers to keep your car tidy to stylish ignition covers that add a dash of personality, we’ve got what you need to make your car feel special. Check us out and see how we can help make your car buying and owning experience even better.
FAQs
Is it cheaper to import or buy a car in Kenya?
With the recent increase in import duty to 35% and additional taxes and fees, importing a car can be quite expensive. Buying a locally-used car in Kenya often turns out to be cheaper when considering the total cost of importation, including taxes, duties, and other related expenses. Locally-used cars do not incur the hefty import duties and can be a more economical choice without the need for modifications to meet Kenyan standards.
What is the KRA duty for imported cars?
The Kenya Revenue Authority (KRA) imposes several duties and taxes on imported cars:
- Import Duty: 35% of the Customs value (CIF).
- Excise Duty: 20% for vehicles with an engine capacity of 1500 cc and below, and 25% for those above 1500 cc.
- Value Added Tax (VAT): 16% of the cumulative Customs Value, Import Duty, and Excise Duty.
- Rail Development Levy: 2% of the CIF value.
- Import Declaration Fee (IDF): 3.5% of the CIF value.
These duties and taxes significantly contribute to the overall cost of importing a car into Kenya.
What is the age limit for cars to be imported in Kenya?
Kenya has a strict age limit for imported used vehicles: they must not be more than 8 years old from the year of manufacture at the time of importation. This regulation is in place to ensure that vehicles on Kenyan roads meet certain standards of roadworthiness and environmental friendliness. The policy aims to reduce the influx of older, potentially less safe, and more polluting vehicles into the country.
How long does it take to import a car to Kenya?
The time it takes to import a car to Kenya can vary based on several factors, including shipping times, customs clearance, and the efficiency of your clearing agent. On average, shipping a car from countries like Japan or the UK to Kenya can take between 4 to 8 weeks. Once the vehicle arrives in Kenya, customs clearance can take an additional 1 to 2 weeks, assuming all documents are in order and there are no delays.
Which country is best to import cars to Kenya?
Japan is arguably the most popular country for Kenyans looking to import used cars. Japanese vehicles are known for their reliability, fuel efficiency, and advanced technology. Additionally, Japan has a vast selection of vehicles that fit within Kenya’s import age limit and right-hand drive requirement. The auction system in Japan also allows buyers to get high-quality vehicles at competitive prices.
