Importing and export tax in Kenya

Kenya’s dynamic trade environment is regulated to ensure compliance with local and international standards. Understanding the tax obligations and processes for importing and exporting goods is essential for businesses and individuals involved in trade. Below is a detailed guide to help you navigate the landscape of importing and exporting in Kenya.

Importing and Exporting: At a Glance

What is Exportation?

Exportation refers to the act of taking goods out of Kenya to a foreign country. According to Section 73 of the East African Community Customs Management Act (EACCMA) 2004, goods for export must be entered (declared) and documented with full particulars submitted to customs. Once declared, the goods must be exported within 30 days.

What is Required When Exporting?

1. Clearing Agent:
   Exporters must engage a licensed customs clearing agent who processes exportation documents in the customs system and facilitates goods clearance.
2. Export Levy:
   Certain items may attract export levies as per the Miscellaneous Fees and Levies Act 2016.
3. Required Documents for Export Clearance:
   • Valid commercial invoice
   • Certificate of origin
   • Permit or license for restricted goods
   • Taxpayer Identification Number (PIN certificate)
   • Purchase orders or contracts
   • Packing list
4. Goods Clearance Process:
   • Entry Declaration: A clearing agent declares the goods to customs for processing.
   • Verification and Stuffing: The agent presents the entry and documents for customs inspection, after which goods are stuffed and released.
   • Exit: Compliant declarations are cleared, and a certificate of export is issued at the exit point.

What is Importation?

Importation involves bringing goods into Kenya from a foreign country. Per Section 34 of EACCMA 2004, imported goods must be declared within 21 days after the commencement of discharge or, in the case of vehicles, on arrival.

What is Required When Importing?

1. Clearing Agent:
   Importers must engage a licensed customs clearing agent to handle import documentation and assist with goods clearance.
2. Taxes and Duties Payable:
   Taxes on imports are determined based on item value and duty rates outlined in legal documents:
   • Import Duties:
     Rates range between 0%, 10%, and 25%, with higher rates for sensitive items listed in Schedule 2 of the EAC Common External Tariff.
   • Excise Duty:
     Levied on excisable items as per the Excise Duty Act 2015.
   • VAT:
     The standard VAT rate is 16%, with certain items exempt or taxed at 0% under the VAT Act 2013.
   • Import Declaration Fees (IDF) and Railway Development Levy (RDL):
     IDF is 3.5%, and RDL is 2% of the import value.
3. Required Documents for Import Clearance:
   • Certificate of Conformity (CoC) for regulated products
   • Import standards mark (ISM) where applicable
   • Valid commercial and pro forma invoices
   • Bill of lading or airway bill
   • Certificate of origin
   • Freight invoice for sea cargo
   • Vehicle logbook and translation (if not in English)
   • Roadworthiness certificate (for vehicles)
   • Taxpayer Identification Number (PIN certificate)
   • Exemption letter (if applicable)
   • Packing list and purchase orders/contracts

Goods Clearance Process for Importation

1. IDF Lodgement and Processing:
   The importer, via a clearing agent, lodges an Import Declaration Form (IDF). The form is sent to the supplier for pre-shipment inspection.
2. Entry Declaration and Tax Payment:
   The clearing agent declares the goods to customs and issues a payment slip. The importer pays the taxes, and compliant declarations are processed.
3. Verification and Clearance:
   Customs conduct physical verification at the customs station, and compliant declarations are cleared and released.

Customs Bonds

A bond is a guarantee that customs will collect all duties, taxes, and penalties from the importer if conditions are unmet.

• Bank Guarantee: Used as security for disputed payments.
• Bond Reinstatement: Issued when conditions of the bond are successfully met.
• Bond Suspension: Happens due to failure to account for bonded transactions.
• Customs Security Bond: A legal agreement to ensure compliance with customs regulations.

Key Takeaways for Traders in Kenya

• Engage Licensed Clearing Agents: Essential for processing import and export documentation.
• Understand Applicable Taxes and Fees: Familiarize yourself with duty rates, VAT, and levies.
• Keep Documentation in Order: Ensure all required certificates, invoices, and permits are available.
• Adhere to Deadlines: Avoid penalties by complying with declaration and payment timelines.

Navigating import and export tax regulations in Kenya can be complex. For expert assistance and seamless customs compliance, consult professionals to manage your trade processes effectively.

FAQs on Importing and Export Tax in Kenya

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