Article 3: KRA CRSP Explained

Breakdown of the 2025 Import Duty, Excise, and VAT Formula

Many first-time importers go into shock when the tax slip arrives. You bought a car for KES 800,000, but the tax demand is KES 950,000. How is this possible?

The answer is CRSP (Current Retail Selling Price). KRA taxes you based on the price of the car when it was brand new in Kenya, not the auction price you paid in Japan.

1. The 2025 Tax Rates (The "Big 5")

With the Finance Act 2025, Import Duty has risen to 35%. This triggers a chain reaction.

35% Import Duty

16% VAT

20-35% Excise Duty

3.5% IDF

2% RDL

2. The Cascading Formula (Tax on Tax)

You pay tax on top of tax. This is the exact sequence the KRA system uses:

1. Customs Value = CRSP × Depreciation (e.g., 35%)

2. Import Duty = Customs Value × 35%

3. Excise Value = Customs Value + Import Duty

4. Excise Duty = Excise Value × Rate (25%)

5. VAT Value = Excise Value + Excise Duty

6. VAT = VAT Value × 16%

3. Real World Example: 2018 Toyota Harrier

Assuming a CRSP of KES 6,000,000 and the maximum 65% depreciation (Taxing 35% of value).

Tax Head	Calculation Base	Amount Payable
Customs Value	6.0M × 35%	KES 2,100,000
Import Duty (35%)	On 2.1M	KES 735,000
Excise Duty (25%)	On (2.1M + 735k)	KES 708,750
VAT (16%)	On (2.8M + 708k)	KES 567,000
IDF (3.5%)	On 2.1M	KES 73,500
RDL (2%)	On 2.1M	KES 42,000
TOTAL TAX		KES 2,126,250

⚠️ Reality Check: The total tax (2.12M) is effectively 100% of the depreciated value of the car. Always budget for this doubling of cost.

4. The "Hybrid" Exception

In 2025, the government offers incentives that can drastically change this calculation.

🌿 Green Energy Incentives

Electric Vehicles (EVs): Excise Duty is capped at 10% (vs 20-35%).

Hybrids: Full hybrids often attract lower excise rates. Importing a Harrier Hybrid instead of a Petrol Harrier could save you over KES 300,000 in Excise and VAT compounding.

📊 Buyer's Verdict

Ignore the CIF: Never calculate taxes based on what you paid the Japanese dealer. It is irrelevant.
Find the CRSP: Before buying, ask your clearing agent to check the current KRA CRSP of that specific chassis code.
Budget for 35%: The move from 25% to 35% Import Duty has increased the total tax bill for most cars by roughly 14% - 18%. Ensure your budget has this buffer.

KRA CRSP Explained: Why Your Duty is Higher Than Expected

Article 3: KRA CRSP Explained

1. The 2025 Tax Rates (The "Big 5")

2. The Cascading Formula (Tax on Tax)

3. Real World Example: 2018 Toyota Harrier

4. The "Hybrid" Exception

📊 Buyer's Verdict

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