16 taxes & levies motorists have to pay in Kenya

• Owning a car in Kenya involves various financial obligations such as import duties
• Motorists also pay indirect taxes & levies
• Role of taxes in generating revenue

Understanding these costs is crucial for every car owner, as they significantly impact the overall expenses of maintaining a vehicle.

This guide will help you navigate the various taxes, levies, and fees associated with car ownership in Kenya, shedding light on how they contribute to government revenue and infrastructure maintenance.

16 taxes & levies motorists have to pay in Kenya

Import Duties and Taxes

1. Import Duty: Car owners pay a 25% import duty on the Customs Value (Cost, Insurance, and Freight - CIF) of imported vehicles to KRA. This is stipulated in the East African Community Customs Management Act, 2004.
2. Excise Duty: The Excise Duty Act, 2015 imposes excise duties based on engine capacity and vehicle age. Older vehicles and those with larger engines attract higher rates. It is calculated at 20% of (Customs Value + Import Duty) for vehicles with 1500 cc and below and 25% for vehicles above 1500 cc.
3. Value Added Tax (VAT): A 16% VAT is charged on the CIF value plus Import Duty and Excise Duty, according to the VAT Act, 2013.
4. Railway Development Levy (RDL): This levy is 1.5% of the CIF value, as per the Finance Act, 2013.
5. Import Declaration Fee (IDF): A 3.5% fee on the CIF value, detailed by the Customs and Border Control Department.

Annual License and Compliance Fees

Motor Vehicle Annual Inspection Fee

This fee is paid annually to the National Transport and Safety Authority (NTSA).

Advance Tax

Commercial vehicle owners pay an annual advance tax, with rates depending on the type and capacity of the vehicle, as per the Income Tax Act, Cap 470.

The Finance Act 2013 increased the advance tax to Sh100 per passenger capacity or Sh5,000 per year, whichever is higher for sedans, station wagons, minibuses, buses and coaches.

For vans, pick-ups, trucks, prime movers, trailers and lorries the rate is Sh2,500 per ton of loading capacity or Sh5,000 per year.

Indirect Taxes

Fuel Tax

In Kenya, fuel attracts different types of taxes & levies as detailed below

1. VAT on fuel: A 16% VAT is charged on petrol and diesel.
2. Road Maintenance Levy: Sh18 per litre.
3. Petroleum Development Levy: Ksh 5.40 per litre, as per the Petroleum Development Levy Order, 2020.
4. Petroleum Regulatory Levy at Sh0.75 per litre
5. Excise Duty on Fuel: As of May 2024, the excise tax of super petrol is Sh21.95 per litre and Sh11.37 for diesel.
6. Import declaration fee 2.5% per litre
7. Railway development levy 1.5% per litre
8. Merchant shipping fee Sh0.03 per litre

Import Duties on Vehicle Parts

Indirect taxes are applied to spare parts and accessories, as per the East African Community Customs Management Act, 2004.

1. VAT on Vehicle Maintenance and Services: A 16% VAT on services at garages and service centres, according to the VAT Act, 2013.
2. Insurance Premium Levy: A 0.2% levy on insurance premiums, as per the Insurance Act, Cap 487.

Other Fees

1. Parking Fees: These are charged by county governments, based on relevant county bylaws and regulations.
2. Toll Fees: Charges for using certain toll roads or bridges.

Conclusion

The taxes, levies, and fees associated with owning a car in Kenya can be significant. They play a vital role in generating revenue for the government and maintaining the country's infrastructure.

It's essential for car owners to stay informed about these costs and plan accordingly. Keep an eye on any changes or upcoming legislation that might affect vehicle-related taxes and fees.

By understanding these financial obligations, car owners can better manage their expenses and avoid any surprises.