We rely on cars for the convenience of getting from one place to another, even though they lose value over time. People still invest in them because, despite their depreciating assets, they have offered reliable service for years.

Deciding between buying a locally used car or importing one from the East can be tricky. While importing a car from countries like Japan might seem cheaper at first, the additional costs like shipping, taxes, and clearance fees can quickly add up.

For instance, a car that costs around Sh. 1 million in Japan can end up costing more than double once it reaches Kenya.

What are the associated fees and taxes that cause the price of a vehicle to bump up steeply to such great extent?

In this article, we’ll focus on one of the most popular cars on Kenyan roads today, the Nissan Note. Kenya has an import age limit of 7 years from the vehicle’s Year of Manufacture (YOM).

For this example, we’ll check out the 2018 Nissan Note model listed on a car-selling website. As of now, its price stands at Sh. 925,000 ($7,198).

When you buy a car from Japan, that’s just the start of the journey. By the time it arrives at Mombasa port, clears customs, gets registered with NTSA, and you’re finally behind the wheel, the total cost will have skyrocketed far beyond what you expected.

Here is a detailed breakdown of these costs that inflate the import cost of a vehicle:

Import Duty

This tax is applied to vehicles imported into Kenya and is calculated based on the car’s customs value. The value is determined using either the Current Retail Selling Price (CRSP) set by the KRA or the actual invoice of the car, whichever amount is higher.

The customs value of the vehicle includes the Cost, Insurance, and Freight (CIF) from Japan to the port of Mombasa.

After purchasing the car from Japan for Sh. 925,000, we can estimate that the total landing cost at Mombasa, factoring in insurance and marine shipping, will be approximately Sh. 1,150,000.

Now, import duty is 35% of the customs value of the car: Assuming customs value is pegged at Sh. 1.15 million, import duty (35% of 1.15 million) will amount to Sh. 400,000

Excise Duty

This tax is applied to certain goods and services, whether locally produced or imported into Kenya, including vehicles. It is calculated as a percentage of the car’s CIF value combined with the import duty.

They are based on the car’s engine capacity and age. For example:

• 20% for cars with engine capacity below 1500cc
• 25% for cars with engine capacity between 1500cc and 3000cc (petrol) or 2500cc (diesel)
• 35% for cars with engine capacity over 3000cc

The Nissan Note has a 1.2-litre engine capacity known for its fuel efficiency and torque. It therefore falls in the 20% excise duty bracket. To first calculate this, we must first consolidate our true excise value:

Excise Value: Customs Value + Import Duty = Sh. 1.15 million + Sh. 400,000 = Sh. 1.55 million.

Excise Duty: 20% of Sh. 1.55 million = Sh. 310,000

VAT Value: Sh. 1.55 million + Sh. 310,000 = Sh. 1.86 million.

Value Added Tax

Value Added Tax (VAT) is a consumption tax charged whenever value is added to goods or services at various stages, from production to the final consumer. It applies to taxable products and services supplied or imported into Kenya.

It is charged at 16% of the VAT value. In this case, 16% of Sh. 1.86 million = Sh. 297,600.

The total value is bumped up to Sh. 2.16 million.

Import Declaration Fee (IDF)

This is a mandatory charge levied on imported goods including cars. It covers cost of processing import declarations and ensures that all imported goods are correctly documented and accounted for.

It is calculated at 2.5% of the CIF (2.5% of Sh. 1.15 million) = Sh. 28,750

Railway Development Levy (RDL)

This tax is used to fund the development and maintenance of railway infrastructure in Kenya and is paid by all imported cars.

It is charged at 1.5% of the car’s CIF value (1.5% of Sh. 1.15 million) = Sh. 17,250

Car Registration Costs

You’ll need to obtain Kenyan license plates and a logbook in your name at this stage. The total cost for issuing the license plates and logbook will be approximately Sh. 30,000, payable to the NTSA.

Number of taxes Kenyans pay to have motor vehicles on roads

Incidental & Miscellaneous Costs

Here are some extra costs you should anticipate beyond the taxes and registration fees:

1. Quality Inspection Services (KEBS requirement): Before your car leaves the port in Japan, it must pass a KEBS-certified roadworthiness test. Depending on the vehicle, this inspection can vary, but let’s estimate it at around Sh. 28,000.
2. Import Declaration Form: The fee for this form is Sh. 2,000.
3. Radiation Fee: Expect to pay Sh. 1,000 for this.
4. Interpol Police Fee: This fee, which ensures the vehicle isn’t stolen or involved in criminal activities, is standard Sh. 15,000.
5. Port Charges: Handling and storage costs at the port will amount to around Sh. 50,000.
6. Minor Repairs & Inspection Fees: Depending on the vehicle, a cautious estimate for this could be Sh. 10,000.
7. NTSA Inspection & Sticker: This will set you back about Sh. 1,750.
8. Agent Fees: If you hire an agent for the import process, fees can vary. For our example, let’s assume it’s around Sh. 40,000.

The total of these incidental costs, subject to variation, amounts to Sh. 131,750.

Japan to Kenyan Road price

When you total all the taxes and fees, it’s clear that by the time your car is ready for the Kenyan roads, the price will have increased by a huge margin.

1. Total VAT value: Sh. 2.16 million
2. IDF Fee: Sh. 28,750
3. RDL Fees: Sh. 17,250
4. Car Registration: Sh. 30,000
5. Incidental costs: Sh. 131,750

If you purchase the car from Japan for Sh. 925,000, by the time you’re driving it on Kenyan roads, you’ll have spent around Sh. 2.4 million. That’s almost three times the original price.