Importing a car into Kenya is a process that involves several taxes and duties. These taxes are imposed by the Kenya Revenue Authority (KRA) and are meant to generate revenue for the government while also regulating the importation of vehicles. In this essay, we will explore the various taxes that a car being imported to Kenya is subjected to and discuss the implications of these taxes on the cost of importing a vehicle.
Import Duty
The first tax that a car being imported to Kenya is subjected to is the import duty. This is a tax that is levied on the value of the vehicle being imported and is calculated as a percentage of the CIF (Cost, Insurance, and Freight) value of the vehicle. The import duty rate varies depending on the type and age of the vehicle, with higher rates being applied to newer vehicles and luxury vehicles. The import duty is meant to protect local industries by making imported vehicles more expensive compared to locally manufactured vehicles.
Excise Duty
In addition to the import duty, a car being imported to Kenya is also subjected to an excise duty. This is a tax that is levied on certain goods that are considered to be harmful or non-essential, such as luxury vehicles. The excise duty rate for vehicles is also calculated as a percentage of the CIF value of the vehicle and varies depending on the engine capacity and age of the vehicle. The excise duty is meant to discourage the importation and consumption of luxury vehicles, while also generating revenue for the government.
Value-Added Tax (VAT)
Another tax that a car being imported to Kenya is subjected to is the value-added tax (VAT). This is a tax that is levied on the value of the vehicle, including the CIF value, import duty, and excise duty. The VAT rate in Kenya is currently set at 16% and is meant to be a consumption tax that is ultimately borne by the end consumer. However, in the case of imported vehicles, the VAT is paid by the importer at the point of entry into the country.
Railway Development Levy
In addition to these taxes, a car being imported to Kenya may also be subjected to other fees and charges. For example, there is a railway development levy that is charged on the CIF value of the vehicle to fund the development of the country’s railway infrastructure.
Inspection Fee
There is also an inspection fee that is charged by the Kenya Bureau of Standards (KEBS) for inspecting the vehicle to ensure that it meets the required safety and environmental standards.
Overall, the taxes and duties that a car being imported to Kenya is subjected to can significantly increase the cost of importing a vehicle. However, these taxes are necessary for generating revenue for the government and regulating the importation of vehicles. It is important for importers to be aware of these taxes and factor them into the cost of importing a vehicle to avoid any surprises.