Why are vehicles cheaper in Uganda compared to Kenya?

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Why are vehicles cheaper in Uganda compared to Kenya?

General observation has shown that motor vehicles are cheaper in Uganda than in Kenya despite the fact that Uganda is a landlocked country and uses the Mombasa Port to get most of their imports.

According to Kenya Revenue Authority (KRA), import duty costs 25% of cost, insurance and freight of a motor vehicle to be imported also called CIF value.

In addition an importer pays 20% of CIF value (already mention in the preceding paragraph). Finally, Value Added Tax of 16% on CIF is paid for the car imported. On these taxes you need the services of a clearing and forwarding agent.

Car importers in Kenya pay the Import Declaration Fee (IDF) which is 2% of the CIF Payable.

Then the car importer pays the Railway Development Levy which is 1.5% of the customs value.

When planning to import a vehicle to Kenya, remember there is a 8 year limit on all imported vehicles. This is a strategy to ensure we do not import old vehicles into the Kenyan roads.

In comparison, Uganda’s Value Added Tax (VAT) is 18% while import duty is 6% according to Uganda’s Tax Structure FY 2017/2018.

The picture below features one of the vehicles imported from Uganda to Kenya. These vehicles are common on Kenyan roads because they are cheaper than buying in Kenya.

Motor vehicles are cheaper in Uganda than in Kenya because of lower import taxes.
Photo: A Range Rover Sports seen on Kenyan roads. This is just among many vehicles imported from Uganda because they are cheaper in that country due to lower import tax.

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Editor-in-Chief

Geoffrey Kerosi, economic and public policy analyst based in Nairobi City. Email: geoffrey@kerosi.com. WhatsApp: +254713 639 776 YouTube: Kerosi TV

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