A guide to starting a car import business in Kenya

• Given the huge demand for vehicles in Kenya, starting a car import business might be a profitable endeavor.
• Here is a step-by-step instruction sheet to get you going:

General findings

1. Research the Market:
   • Analyze the demand for different types of vehicles in Kenya, considering factors such as affordability, fuel efficiency, and suitability for local conditions.
   • Study the competition and identify gaps or niches in the market that you can target.
2. Develop a Business Plan:
   • Outline your business goals, target market, marketing strategies, and financial projections.
   • Determine your sourcing channels, such as auctions, dealerships, or direct imports.
3. Register Your Business:
   • Decide on a business name and register it with the relevant authorities, such as the Registrar of Companies.
   • Obtain the necessary licenses and permits required to operate an import business.
4. Secure Financing:
   • Determine your startup costs, including purchasing inventory, logistics, office space, and marketing.
   • Explore financing options, such as loans from banks or financial institutions, or consider seeking investors.
5. Establish Supply Chains:
   • Identify reliable suppliers or dealerships from which you can source vehicles.
   • Build relationships with international exporters or manufacturers and negotiate favorable terms.
6. Arrange Logistics:
   • Set up a reliable shipping and logistics process to transport vehicles from the source country to Kenya.
   • Familiarize yourself with the import regulations, taxes, and duties imposed by the Kenyan government.
7. Create an Online Presence:
   • Develop a professional website and social media profiles to showcase your inventory and attract potential customers.
   • Utilize online marketing techniques such as search engine optimization (SEO) and digital advertising.
8. Build a Network:
   • Establish connections with local car dealers, mechanics, and other industry professionals.
   • Attend trade shows, conferences, and networking events to expand your contacts and stay updated on industry trends.
9. Implement Effective Marketing Strategies:
   • Advertise your business through various channels, such as online classifieds, local newspapers, radio, and television.
   • Offer competitive pricing, promotions, or value-added services to attract customers.
10. Provide Excellent Customer Service:
    • Ensure prompt and transparent communication with customers.
    • Offer warranties, after-sales services, and assistance with vehicle registration and documentation.
11. Stay Compliant with Regulations:
    • Stay informed about changes in import regulations, taxes, and duties.
    • Maintain accurate records and adhere to all legal requirements.

Where does Kenya import cars from?

Japan: Japan is one of the largest suppliers of cars to Kenya. Popular Japanese car brands such as Toyota, Honda, Nissan, Subaru, and Mitsubishi are commonly imported.

United Kingdom: Kenya also imports cars from the United Kingdom. Brands like Land Rover, Jaguar, and Mini are among the British cars imported into the country.

United States: American car brands such as Ford, Chevrolet, and Jeep are imported from the United States to Kenya.

Germany: Germany is known for its luxury car brands, and Kenya imports vehicles from German manufacturers like Mercedes-Benz, BMW, and Audi.

South Korea: Cars from South Korean manufacturers like Hyundai and Kia are also imported into Kenya.

India: Vehicles from Indian brands such as Tata and Mahindra are imported into Kenya as well.

Amount of tax to pay for importing a car

• The amount of tax you need to pay for importing a car to Kenya depends on various factors, including the age, engine capacity, and type of vehicle.
• The tax rates are subject to change, so it’s important to verify the latest information with the Kenya Revenue Authority (KRA) or a licensed clearing agent.
• The general tax structure for importing a car to Kenya is as follows:

1. Import Duty: This is based on the Customs Value (CIF) of the vehicle. The rates vary depending on the vehicle’s age and engine capacity. For example, the duty for a vehicle less than three years old ranges from 20% to 25% of the CIF value, while vehicles over three years old can have import duty rates ranging from 25% to 30%.
2. Excise Duty: This is based on the vehicle’s engine capacity and is calculated after adding the Import Duty. The rates range from 20% to 30% depending on the engine capacity.
3. Value Added Tax (VAT): VAT is calculated on the sum of the CIF value, Import Duty, and Excise Duty. The VAT rate in Kenya is generally 16%.

Additionally, there may be other charges such as an IDF (Import Declaration Fee), railway development levy, or an additional fee for vehicles with higher engine capacities.

Age requirement

Regarding the age requirement for importing a car to Kenya, vehicles imported to Kenya should not be older than eight years from the year of first registration. This means that if the car was first registered in 2020, you can import it until 2028.

However, it’s important to note that regulations can change over time, so it’s advisable to consult the KRA or a licensed clearing agent for the most up-to-date information on age restrictions for importing vehicles to Kenya.

Car import duty calculator in Kenya

1. Determine the Current Retail Selling Price (CRSP): The CRSP is the value of the vehicle as determined by the Kenya Revenue Authority (KRA). The KRA publishes a list of current values for different makes, models, and years of vehicles.
2. Calculate Import Duty: The import duty is calculated as a percentage of the CRSP based on the age of the vehicle and the engine capacity. The following rates apply:a. For vehicles aged 8 years and below:
   • Engine capacity up to 1500cc: 25% of CRSP
   • Engine capacity above 1500cc: 30% of CRSP
   b. For vehicles aged 9-10 years:
   • Engine capacity up to 1500cc: 30% of CRSP
   • Engine capacity above 1500cc: 35% of CRSP
   c. For vehicles aged 11-12 years:
   • Engine capacity up to 1500cc: 35% of CRSP
   • Engine capacity above 1500cc: 40% of CRSP
   d. For vehicles aged 13-14 years:
   • Engine capacity up to 1500cc: 40% of CRSP
   • Engine capacity above 1500cc: 45% of CRSP
   e. For vehicles aged 15 years and above:
   • Engine capacity up to 1500cc: 50% of CRSP
   • Engine capacity above 1500cc: 55% of CRSP
3. Calculate Excise Duty: Excise duty is calculated as a percentage of the import duty based on the engine capacity. The rates are as follows:
   • Engine capacity up to 1500cc: 20% of import duty
   • Engine capacity above 1500cc: 30% of import duty
4. Calculate VAT: Value Added Tax (VAT) is calculated as 16% of the sum of the import duty and excise duty.
5. Calculate the Total Duty Payable: The total duty payable is the sum of import duty, excise duty, and VAT.

How to import an old car in Kenya

1. Confirm import eligibility: Check the age restrictions set by the Kenya Bureau of Standards (KEBS) and the Kenya Revenue Authority (KRA) regarding the importation of used vehicles. As of my knowledge cutoff in September 2021, vehicles older than eight years are not allowed for importation into Kenya.
2. Identify a reputable clearing agent: Find a reliable clearing agent in Kenya who can assist you throughout the importation process. They will handle documentation, customs clearance, and other necessary procedures.
3. Obtain an Import Declaration Form (IDF): To initiate the importation process, you’ll need to obtain an IDF from the KRA. This form declares your intention to import a vehicle and requires details such as the vehicle’s make, model, year of manufacture, and engine capacity. You can apply for an IDF online through the KRA’s portal.
4. Shipping and documentation: Arrange for the shipping of the vehicle to a Kenyan port. Your clearing agent can help you with this. Ensure you have all the necessary documentation, including the vehicle’s original logbook (ownership document), purchase invoice, insurance documents, and a copy of the seller’s national ID or passport.
5. Pre-shipment inspection: The KEBS requires that all vehicles be inspected before shipment to ensure they meet safety and environmental standards. Engage an appointed inspection agent to inspect your vehicle in the country of export and issue a Certificate of Roadworthiness (CoR). This certificate will be required during the importation process.
6. Pay the necessary fees: You’ll need to pay various fees during the importation process, including customs duties, import processing fees, port handling charges, and other levies. The KRA will assess these fees based on the vehicle’s value, engine capacity, and other factors.
7. Customs clearance: Once your vehicle arrives in Kenya, it will go through customs clearance. Your clearing agent will handle this process, which involves presenting the required documentation, paying applicable duties and taxes, and obtaining a customs release order.
8. Registration and licensing: After clearing customs, you’ll need to register your vehicle with the Registrar of Motor Vehicles. Provide the necessary documents, including the original logbook, import documents, CoR, and your identification documents. You’ll also need to pay the registration and licensing fees.
9. Vehicle inspection and compliance: The KEBS may conduct another inspection to ensure the vehicle complies with Kenyan standards. This inspection typically focuses on emissions and roadworthiness.
10. Pay all outstanding fees: Finally, settle any outstanding fees, such as value-added tax (VAT), excise duty, and other levies that may be applicable.