Customs and Excise Duty

Customs duty is charged on imported and some exported goods. The duties levied on imported
goods are separated mainly into import duty, excise duty and suspended duty. In addition VAT is
also collected on goods imported and cleared
for home consumption. Customs import duty is paid or a bond guarantee executed if goods
satisfy all the requirements for entry into Kenya.

Customs declaration
A customs declaration (Entry) in the prescribed Form (Form C63) is required for clearing both
imports and exports. Import Declaration Fee (IDF) is charged at a rate of 2.25% of the value of
goods imported from countries outside the East African Community subject to a minimum of
KShs 5,000 and is payable on all imports except those declared as post parcels and whose value
is below KShs 5,000. Imports originating from Uganda and Tanzania do not attract IDF.

Simba system
KRA, in an attempt to modernize customs operations, introduced the simba system in 2005.
Under the simba system, customs authorities require one to be registered as a clearing agent in
order to lodge documents electronically.

Tariff classification
Goods are classified under the Harmonized System Convention (HSC) that forms the basis for
tariff classification of goods traded in the international market as listed in Annex 1 to the
Protocol on the Establishment of the East African Community Customs Union.

Customs duty rates

Duties are charged at varying rates as published by the Council of Ministers under the common
external tariff. The bases of charge of duties are ad valorem (on price value of the good so
declared) and specific units (on quantity, weight, number or measurement). The customs duty
rates range from 0 to 25%. Reduced customs duty rates are applicable on some imports from
countries in the COMESA region, while “Sensitive” imports attract duty above 25% as
prescribed by the Council of Ministers.
With effect from 1 January 2005, the East African Community Partner States (Kenya, Uganda
and Tanzania) agreed to charge import duties as follows:

Common external tariff (CET) on goods coming into the EAC from third party states.
The applicable three-band Common External Tariff rates are as follows:
Category Rate (%)
Raw materials 0
Intermediate goods 10
Finished goods 25
However, sugar, wheat and milk and a few other products are categorized as “sensitive” and
attract surcharges above the 25% maximum, while all goods entered for home use from Export
Processing Zone (EPZ) enterprises attract additional duty as follows:

• 2½% of the value of sales, or

• 5% of specific rate specified in the Annex I to the EAC
Customs Union Protocol: Common External Tariff.
The Partner States agreed on a transitional provision to eliminate the internal tariffs under the
principle of asymmetry: that with effect from 1 January 2006 the Kenyan exports to Uganda and
Tanzania would attract duty at reducing rates as follows:
Year Uganda Tanzania
Duty rate (%) Duty rate (%)*
1 10 25
2 8 20
3 6 15
4 4 10
5 2 5
6 0 0
* Maximum rates for the year.

The Customs Union’s objective is to ensure that the member states do not pay import duty on
goods produced from within the region. Effective 1 January 2010, no member state is required to
pay duty on goods produced from within the region as long as they possess a certificate of origin.
The Customs Union will culminate into Common Market effective 1 July 2010 where labour and
capital goods will move freely within the region.

Dutiable value
The value of imported goods is determined in accordance with the Agreements on Customs
Valuation (ACV) that Kenya adopted in January 2000. The value is generally based on the price
actually paid or payable for the goods when sold for export to the country of importation.

Payment of customs duty

The import duty is payable to the Commissioner of Customs Services Department. Where entry
has been checked and accepted, it is payable within five (5) days from the date of acceptance.

Duty exemptions
Goods that are exempt from duty are listed in the Fifth Schedule to the East African Customs
Management Act.
These include goods liable to free duty and goods imported by or on behalf of public bodies,
privileged persons and institutions.
Bona fide household goods may be imported, free of duty, provided that the importer changes his
or her residence from a place outside Kenya to a place within Kenya on a permanent or
temporary basis. Temporary residence importers who change their residence to a place outside
Kenya within 90 days of their arrival are required to re-export their household goods within the
30 days from the date of change of his residence to a place outside Kenya, otherwise duty
becomes payable from the date of importation.

Examples of exempt items include protective apparel, mosquito nets, speed governors, seeds for
sowing, and raw materials for medicaments among others.
Anti-dumping and countervailing duty
Anti-dumping and countervailing duties are levied on goods considered to be dumped in Kenya
or on subsidized imported goods respectively. These goods are the subject of investigations into
pricing and export incentives in the country of origin, and the rate imposed would depend on the
result of the investigations.
Anti-dumping and countervailing duties are either levied on ad valorem basis (percentage of the
value of the goods) or as a specific duty (percentage per unit, kilogram, litre etc).
The level and type of duty imposed on a product are subject to the following criteria:
• Value of the goods (customs value);
• Volume or quantity of the goods; and
• Tariff classification of the goods (tariff heading)

Duty remission and refund

Duty is refundable on imported merchandise that is subsequently exported, in cases where duty
has been paid in error or in case of bad debts that are 3 to 5 years old.
Privileged persons or institutions are entitled to refund of certain duties, subject to conditions
determined by the Commissioner.
Duty may also be remitted if goods are destroyed or damaged while under customs control or
during voyage or goods are returned unused to the seller.
Refund claims must be presented within one year from the date of payment of that
duty.

Excise duty
Excise duty is imposed on specified goods and services whether imported or locally
manufactured. Goods liable to excise duty include wines and spirits, beer, bottled water, soft
drinks and cigarettes among others. Excisable services include mobile and wireless phone
services and casino.

Value for excise duty

The rate of excise duty applicable on locally manufactured excisable goods is the ex-factory
selling price of the product.
Excisable value of imported goods is the sum of the value of goods ascertained for the purposes
of import duty and the amount of import duty, suspended duty and dumping duty if any.

Payment of excise duty

Excise duty, payable to the Commissioner of Domestic Taxes on local supplies, is due by the
20th day of the month following the month in which goods and services are supplied by the
producer while duty on imported goods is payable within five days after entry has been checked
and accepted.
Taxes and levies on petroleum oils are due and payable at the time of importation for the final
product or at the time of release by customs from the Kenya Petroleum Refineries Limited in
case of crude oil.
Excise tax and levies on the Line Fill is deferred until a company ceases operation or winds up
business or where Kenya Pipeline Company Limited notifies the Commissioner that a petroleum
company intends to withdraw from participation.