IND 2

Customs duty and the East African Community Customs Management Act

1Scope and legal basis

Customs is the one tax Kenya administers under regional rather than national law. The East African Community Customs Management Act 2004 (EACCMA), made under the EAC Customs Union Protocol, governs the importation, exportation, warehousing and transit of goods in all EAC partner states, and the EAC Common External Tariff (CET) sets the import duty rates on goods entering the Community from outside it; goods originating in a partner state move duty-free under the EAC Rules of Origin. Kenya adds its own charges under the Miscellaneous Fees and Levies Act 2016 (the import declaration fee and the railway development levy), collects excise duty and VAT on imports, and administers the whole through the KRA's Customs and Border Control Department using the Integrated Customs Management System (iCMS) and the Kenya National Electronic Single Window (KenTrade). The CET was overhauled in 2022 into four bands (0%, 10%, 25%, 35%) with a list of sensitive items above 35%, and the EAC Council gazettes annual changes each July (for 2026/27, mobile phones moved from 0% to 25% and recorded software media to 10%, with increases on ceramics, glass, iron and steel and furniture). The Finance Act 2026 requires importers to hold an export declaration from the country of origin from 1 September 2026.

2Key definitions

3Charge, computation and rates

The import tax stack

Procedures, reliefs and special regimes

• Pre-arrival: an import declaration form is lodged on the single window before shipment for most goods, KEBS pre-export verification of conformity is obtained for regulated goods, and permits (KEPHIS, PPB, KRA excise, NEMA) are secured; the IDF is paid at this stage.
• Entry: the customs agent lodges the entry on iCMS with the documents, the system assesses duties, the importer pays through the KRA payment channels, and the goods pass through the risk-based lanes (green: release; yellow: document check; red: physical examination). Post-clearance audit may reassess within five years.
• Exemptions and remissions: the Fifth Schedule to the EACCMA exempts the President, diplomats, aid-funded projects, returning residents' personal effects, passengers' baggage (up to USD 2,000 from July 2026, raised from USD 300), goods for the disciplined forces, religious and charitable goods, and specified machinery and inputs; duty remission schemes allow manufacturers of goods for export (and some for the local market) to import inputs at 0% under the EAC Duty Remission Regulations; EPZ and SEZ enterprises import free of duty and VAT.
• Temporary importation (vehicles, equipment for projects, exhibition goods) is allowed against a bond for up to twelve months; goods re-exported within the period incur no duty.
• Exports: most exports carry no export duty, but the Miscellaneous Fees and Levies Act imposes an export levy on raw hides and skins (80%), scrap metal, and certain unprocessed products, and the export and investment promotion levy on imports of competing goods; exporters must lodge an export entry and, for VAT zero-rating, hold the customs export confirmation.
• Authorised economic operators (AEO) enjoy simplified procedures and fewer examinations; customs agents must be licensed annually and are jointly liable for duties on entries they lodge.
• Post-importation: goods used contrary to an exemption or remission become liable to the duty forgone plus penalties; the Finance Act 2025's clawback for inconsistent use applies to VAT as well.

Offences and enforcement

• Under-declaration of value or quantity, misclassification, false origin claims, smuggling, and diversion of transit or warehoused goods are offences under Part XVIII of the EACCMA, punishable by a fine of up to 50% of the dutiable value (or USD 10,000 for some offences) and imprisonment of up to five years, with forfeiture of the goods and the conveyance.
• Disputes over classification, valuation or origin go first to the Commissioner of Customs by application for review within 30 days, then to the Tax Appeals Tribunal and the High Court, with the East African Court of Justice available on Community law questions.
• Duty and levies not paid are recovered under the Tax Procedures Act as though they were tax (Finance Act 2026), including by agency notice and distress; the KRA may summarily recover amounts up to KES 100,000.

4Compliance: returns, payment and penalties

Customs taxes are transaction-based rather than periodic: duty, excise, VAT, IDF and RDL are assessed on each entry and paid before release, so there is no monthly customs return, though importers who are VAT-registered claim the import VAT in the monthly VAT 3 return and manufacturers under remission schemes file reconciliation returns of inputs used. An importer must keep the entry, invoices, transport documents, certificates of origin, permits and payment receipts for five years for post-clearance audit, and from 1 September 2026 must obtain and retain the export declaration from the country of origin or risk rejection of the entry. Late lodgement of an entry (beyond 21 days) leads to warehouse rent and, after the period, sale of the goods by public auction; late payment of assessed duty attracts interest at 2% a month under the EACCMA (a higher rate than the Tax Procedures Act's 1%), and under-payment discovered on audit is assessed with the duty, interest and penalties.

5Examinable focus