All the Taxes You Pay When Importing a Car Worth Ksh 1 Million

I’ve never been one to switch cars frequently. Take my current car, an Audi A1 from 2011, which I bought from a colleague in 2017 for Ksh1,200,000. For the past six years, it’s been my trusted companion. 

But for the past two years, I’ve started feeling the need for an upgrade—something bigger, better, and more in line with my current lifestyle. So, I’ve been spending my free time browsing the internet, diving deep into reviews, and comparing prices. After all that research, I’ve narrowed my options to a 2018 Mazda CX-5 and a 2019 Subaru Forester.

Two months ago, a friend who works as a freelance car importer reached out with an enticing offer. One of the cars I had my eye on, Subaru Foresters, was up for auction in Japan. The deal was too good to pass up, so I entered the auction—and won! 

I managed to secure the car for just $7,000, which, with an exchange rate of 144, came to approximately Ksh1,008,000.

However, that was just the beginning. By the time the car landed at the Mombasa port, cleared customs, and got registered, the total cost had ballooned to over Ksh3,000,000. Here are all the taxes and fees I paid during the process.

Read Also: How Much Taxes Do Car Owners Pay in Kenya

Import Duty

Import duty is a tax levied by the government on cars brought into the country. The import duty is applied to the customs value of the vehicle, which is determined based on the Current Retail Selling Price (CRSP) provided by the Kenya Revenue Authority (KRA) or the actual invoice value—whichever is higher.

The customs value of a car includes the Cost, Insurance, and Freight (CIF), essentially covering the total cost of buying the vehicle, insuring it during transport, and shipping it to the Mombasa port. 

In my case, I bought my Subaru Forester for Ksh1,008,000, but that was only part of the story. After adding the marine insurance and shipping costs to Mombasa, the total came to Ksh1,450,000. This is the customs value that the Kenya Revenue Authority uses to calculate the import duty.

The import duty is set at 35% of the customs value. Here’s a breakdown of the calculation:

• Customs Value (CIF): Ksh1,450,000
• Import Duty (35% of CIF):

• 35% of 1,450,000 = Ksh507,500

Excise Duty

Excise Duty is a tax on specific goods and services manufactured locally or imported into the country, including cars. In Kenya, this tax is calculated as a percentage of the Excise Value, which is the sum of the car's CIF value and the import duty.

The excise duty rates are based on the vehicle’s engine capacity and age. For Example:

• 20% for vehicles with an engine capacity below 1,500cc
• 25% for vehicles with an engine capacity between 1,500cc and 3,000cc (for petrol engines) or 2,500cc (for diesel engines)
• 35% for vehicles with an engine capacity exceeding 3,000cc (for petrol engines) or 2,500cc (for diesel engines)

My Subaru Forester has an engine capacity of 2,000cc, so it falls into the 25% excise duty bracket.

To calculate the excise duty, you first need to determine the Excise Value:

• Customs Value (CIF): Ksh1,450,000
• Import Duty: Ksh507,500
• Excise Value: Customs Value + Import Duty = 1,450,000 + 507,500 = Ksh1,957,500
• Excise Duty is calculated at 25% of the Excise Value:

• Excise Duty: 25% of 1,957,500 = Ksh489,375

Value Added Tax (VAT)

According to the KRA website, "VAT is a consumption tax imposed whenever a value is added on applicable goods and services at each stage of the supply chain from production to consumption. It is levied on the use of taxable products and services supplied or imported into Kenya." 

When importing a car, you, as the consumer, must pay VAT. VAT is charged at 16% on the VAT Value, which is the sum of the CIF value, Import Duty, and Excise Duty.

To determine the VAT for an imported vehicle, you first need to calculate the VAT Value:

VAT Value = CIF Value + Import Duty + Excise Duty

In my case:

• CIF Value: Ksh1,450,000
• Import Duty: Ksh507,500
• Excise Duty: Ksh489,375

So, the VAT Value is:

• VAT Value: 1,450,000 + 507,500 + 489,375 = Ksh2,446,875
• VAT is calculated at 16% of the VAT Value:

• 16% of 2,446,875 = Ksh391,500

Import Declaration Fee (IDF)

The Import Declaration Fee (IDF) is a mandatory charge imposed on imported goods, including vehicles. It covers the cost of processing import declarations and ensures that all imported goods are correctly documented and accounted for.

The IDF is calculated at 2.5% of the CIF value of the vehicle.

For my imported Subaru Forester, with a CIF value of Ksh1,450,000, the calculation is as follows:

IDF: 2.5% of 1,450,000 = Ksh36,250

Thus, the Import Declaration Fee for my vehicle amounted to Ksh36,250. 

Railway Development Levy (RDL)

The Railway Development Levy (RDL) is another tax applied to imported vehicles. This levy is specifically used to fund the development and maintenance of railway infrastructure in Kenya.

The RDL is charged at 1.5% of the vehicle’s CIF value.

Using the same CIF value for my Subaru Forester, which is Ksh1,450,000, the calculation is:

RDL: 1.5% of 1,450,000 = Ksh21,750

Therefore, the Railway Development Levy for my vehicle amounted to Ksh21,750. 

Car Registration Costs

Beyond the importation taxes and duties, registering your vehicle in Kenya involves additional expenses. These include obtaining Kenyan license plates and a logbook in your name.

The total cost of registering my vehicle, including the issuance of the license plates and the logbook, was Ksh30,000, which was paid to the National Transport and Safety Authority (NTSA).

This registration process ensures that the vehicle is legally recognized and documented under Kenyan law, allowing you to drive it on local roads.

Read Also: Money Confessions: I Took a Loan to Buy a Luxury Car - Wueh! 

Other Incidental Costs

When importing a vehicle into Kenya, there are several additional fees beyond the primary taxes and registration costs. These incidental costs include:

• KEBS Requirements (QISJ Roadworthiness Check): Before the car leaves the Japan port, it must pass the Kenya Bureau of Standards (KEBS) roadworthiness check. The cost of the inspection will typically depend on the type of car you are importing. In my case, I paid Ksh43,000.
• Import Declaration Form (IDF): An administrative fee of Ksh2,000.
• Radiation Fee: This is a mandatory fee of Ksh1,000.
• Interpol Police Fee: To ensure the vehicle isn’t stolen or under any criminal scrutiny, a fee of Ksh15,000 is charged.
• Port Charges (CFS): The costs associated with handling and storing the vehicle at the port amount to Ksh55,000.
• Minor Repairs and Inspection Fees: To verify the vehicle’s roadworthiness, you may need to conduct minor services before you drive off. The cost will depend on the car. In my case, my car needed a few adjustments, a wash, and an oil change. This cost me Ksh15,000.
• National Transport and Safety Authority (NTSA) Inspection and E-Sticker: For vehicle inspection and obtaining the e-sticker, the cost is Ksh1,750.
• Agent Fees: If you use an agent to handle the importation process, this fee is Ksh62,000.

These additional costs total up to Ksh194,750, and they are necessary to ensure that the vehicle meets all regulatory requirements and is properly cleared for use on Kenyan roads.

Read Also: I Took a Loan Against My Car and Regretted it Immediately

From Auction Price to Final Cost: How Taxes and Fees Add Up

When I won the auction for the 2019 Subaru Forester at Ksh1,008,000 (around $7,000), I thought I had scored a great deal. However, as any experienced car importer will tell you, the price you pay for the car is just the beginning. By the time my car arrived in Kenya and was ready for the road, the total cost had risen significantly.

Let me break down how the price I paid ballooned from an initial cost of Ksh1,008,000:

Shipping and Insurance Costs (CIF Value):

• First, I had to account for shipping and insurance. These costs brought the car's CIF value (Cost, Insurance, and Freight) to Ksh1,450,000. This is the base value that customs use to calculate taxes and fees.

Import Duty (35% of CIF):

• The first big tax I had to pay was import duty, which is 35% of the CIF value. This added another Ksh507,500 to the cost, bringing the total to Ksh1,957,500.

Excise Duty (25% of CIF + Import Duty):

• Since my Subaru Forester has a 2,000cc engine, I had to pay an additional Ksh489,375. By this point, my total cost was up to Ksh2,446,875.

VAT (16% of CIF + Import Duty + Excise Duty):

• Then, there’s VAT (Value Added Tax), charged at 16% on the sum of the CIF value, import duty, and excise duty. This amounted to Ksh391,500, pushing the total to Ksh2,838,375.

Other Fees and Charges: In addition to the main taxes, several smaller fees had to be paid:

• Import Declaration Fee (IDF): Ksh36,250
• Railway Development Levy (RDL): Ksh21,750
• Car Registration Costs: Ksh30,000
• Other Incidental Costs (like roadworthiness checks, agent fees, port charges, and inspections): Ksh194,750

So, from my winning auction bid of Ksh1,008,000, I paid a total of Ksh3,121,125. That’s more than three times the original purchase price. 

Read Also: I Took a Loan Against My Car and Regretted it Immediately

Wrapping Up 

Buying a car is an exciting milestone, but it’s also a complex process that requires careful planning, especially when importing one from abroad. Planning for all the taxes, fees, and incidental costs that come with the process is essential so you aren’t blindsided. 

For first-time importers, hiring professionals to guide you can save you from costly mistakes. They understand the ins and outs of the process and can ensure everything runs smoothly. 

It may seem overwhelming, but if you find the process too complicated or stressful, consider buying an already-imported car from a local showroom or yard. The sellers typically factor in all these costs and add their profit margin, meaning you’ll likely pay 5% to 20% more than you would if you imported the car.