Guest Post - Vehicle Import Duty

Anthony Mwaura


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One of the most common questions that potential customers ask me is how the duty and related taxes of an imported car is arrived at.

First, the year of manufacture of the vehicle you intend to import plays a major part in determining the duty. Another major influence is “The first date of registration” We will however get to that a little bit later.

 

The duty payable on the importation of a motor vehicle is arrived at as follows according to KRA’s FAQ Q3 

􀂃 Import Duty: 25% of the CIF value of the vehicle

􀂃 Excise Duty: 20% of the (CIF value + Import Duty)

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

􀂃 IDF: 2.25% of the CIF value or Ksh. 5,000, whichever is higher, is payable.

CIF – This is the customs value of the vehicle i.e. the Cost, Insurance & Freight paid for the vehicle. The CIF value of the vehicle is also deduced from the Current Retail Selling Price (CRSP) of the vehicle

However, the KRA uses the CRSP rather than the CIF of a vehicle. For example if two of us import year 2008 BMW 318i with similar dates of first registration but different CIF, we pay the same duty.

This link  leads you to an MS Excel sheet with the current CRSP list as given by the KRA. It has most common vehicle models imported into Kenya

This link gives you a duty calculator that does the donkey work for you. All you do is insert figures where appropriate. On Cell C15 of this calculator, labelled “depreciation” you insert the cost depreciation rate. For example, if the car is brand new, it has nil depreciation. A one year old car has a depreciation rate of 10%, 2 years old 20%, 3 has 30%, 4 has 40%, 5 has 50%, 6 has 60% while a 7 year old car has rate of 70%.

This is where the first date of registration plays part. For example, if one import’s a car manufactured in year 2003 first registered in the month of February, which make it 7 years old as at the date of this post and therefore 70% rate applies. If another person imports a similar unit, manufactured in 2003, first registered in December and it lands in Mombasa before December 2010, it’s considered as a 6 year old car and therefore 60% rate applies which in turn increases the duty considerably.

You will also notice cell D11 and D12 labelled CC. You insert the engine capacities are guided. The CC plays a part too. For example, Toyota Corolla NZE model, 1300cc, 1500cc, 1600cc, 1800cc and 2200cc diesel.  However, the cost of the each of these models varies in the CRSP and therefore the engine capacity plays a small part.

Case study

Whenever I come across customers, I put all these considerations in place when identifying and giving quotations on any unit. For instance, early this month, a lady called Joan, called me and explained she had a budget of KES 900k and wanted to bring in a  2000cc Nissan Xtrail. I gave her my estimates for a 2003 unit registered between January and July of the same year. My quotation hit KES 1.2M with a CIF of US$9500 and she asked me how I had arrived at that figures while she had identified a number of units with CIF of US$8500 and US$7000 in one of the Japanese companies websites advertised in the Kenyan dailies. I asked for the web address and to her word, there were units going at that much. However, one unit, lets call it unit A US$8500 was a December (date of first registration) 2004. The second one (unit B) US$7000 was a September 2006 which makes it 5 years old. Using our calculator and KRA’s CRSP figure of KES 3,650,000 for a 2000cc Nissan Xtrail,

Unit A (US$8800):  Yr 2004 Dec (5 years old) duty payable = KES 634,798

Unit B (US$7300): Yr 2006 July (4 years old) Duty payable = KES 762,758

My quote: 2003 July (7 years old) duty payable = KES 378,879

Had she not consulted, she would have imported unit B which appeared cheaper not knowing how much it would cost to clear. Such are the mistakes that people make and their units end up accumulating demurrage before they can raise the duty. At times people are unable to raise the duties or by the time they are able to, the demurrage is too much. Your vehicles could end up auctioned to pay off storage fees and to decongest the port.

The Author, Anthony Mwaura, heads the Imports Desk at Hilltop Junction Motors on Ngong Road, Opposite Kenya Science Teachers College.

e-mail:  info@hilltopjunction.com