Starting an Import/Export Business in Kenya: Licences, KEBS, and Duty Drawbacks

Business Registration: Get This Right First

Before anything crosses a border, you need the right business structure in place. For most commercial import/export operations, that means registering a limited liability company through the Business Registration Service (BRS). A sole proprietorship can work for very small-scale operations, but lenders, suppliers, and freight companies treat a company with a separate legal identity differently — and some international suppliers will only deal with incorporated entities.

Once the company is registered, two registrations at KRA are non-negotiable. First, a company KRA PIN — different from your personal PIN and tied to the business. Second, VAT registration. Customs clearance at KRA requires a VAT PIN; without one, you cannot file an import declaration. The VAT registration threshold (KES 5 million annual turnover) does not protect importers here — if you are importing commercially, KRA expects VAT registration regardless of your revenue level.

Open a corporate bank account before your first purchase order. Paying a foreign supplier from a personal account creates paper-trail problems when you later need to prove import costs for duty drawback claims or VAT input recovery.

Import Licences: Most Goods Do Not Need One — But Some Do

Kenya does not require a general import licence. Most goods — clothing, furniture, industrial equipment, consumer electronics — can be imported without any licence, provided they meet KEBS standards (more on that below). Where licences apply, they are product-specific and issued by the relevant regulatory body.

The categories that require permits before goods enter the country:

• Food products: Kenya Bureau of Standards (KEBS) approval and Kenya Food and Drugs Authority clearance. The KFDA reviews labelling, formulation, and shelf-life documentation.
• Pharmaceuticals: Pharmacy and Poisons Board (PPB) import permit, applied for before each shipment. The PPB checks that the product is registered in Kenya or approved for import.
• Agricultural inputs (seeds, pesticides, fertilisers): Kenya Plant Health Inspectorate Service (KEPHIS) clearance. KEPHIS also handles phytosanitary certificates for plant-based products.
• Electronics: KEBS type approval, confirming the product meets Kenya Standards for electromagnetic compatibility and safety.
• Firearms and security equipment: Kenya Police Service licensing, which is a separate and lengthy process.

If your product category is not on this list, you still need to meet KEBS standards — you just do not need a pre-shipment licence. The distinction matters because the KEBS Pre-Export Verification of Conformity (PVoC) process applies to both categories.

KEBS and PVoC: The Inspection That Happens Before the Goods Leave

This is the part of Kenyan import regulation that catches most first-time importers off guard. Kenya Bureau of Standards runs a Pre-Export Verification of Conformity programme that requires most consumer goods to be inspected in the exporting country — before they are shipped. You do not find out whether your goods pass Kenyan standards when they arrive at Mombasa. You find out when they are still in a warehouse in China, India, or wherever they were manufactured.

KEBS has appointed approved inspection agents operating in key exporting countries: SGS, Bureau Veritas, Intertek, and TÜV Rheinland are the main ones. Your supplier needs to arrange an inspection appointment, present the goods and documentation, and receive a Certificate of Conformity (CoC) from the agent. That CoC travels with the shipment and is presented to customs on arrival.

Goods arriving without a valid CoC are not automatically rejected, but the alternatives are expensive. KRA customs can hold the consignment while local KEBS testing is arranged — this testing is slower and costs more than the original PVoC inspection would have. In some cases goods are rejected outright. The re-inspection cost and storage fees during the delay can easily exceed the cost of doing PVoC correctly in the first place.

The PVoC inspection fee is charged by the inspection agent, typically 0.5–1% of the FOB value of the goods. Budget for this as a fixed cost of importing from outside Kenya.

KRA Customs: What You Actually Pay on Every Import

The import duty figure on an HS code table is not the only charge you pay when goods clear customs. Kenya stacks several levies on top of each other, all calculated on different bases. Here is how the charges work:

• Import Duty: 0–35% of the CIF value, depending on the HS code (tariff classification) and the origin country. Kenya uses the EAC Common External Tariff — goods from EAC partner states (Uganda, Tanzania, Rwanda, Burundi, South Sudan) often attract zero duty. COMESA member states get preferential rates. Goods from the rest of the world pay the standard CET rate.
• VAT: 16% charged on the CIF value plus the import duty. Not on CIF alone — the duty is added to the base before VAT is calculated.
• Import Declaration Fee (IDF): 3.5% of the CIF value, paid upfront when filing the customs entry.
• Railway Development Levy: 2% of CIF, collected at customs.
• KEBS Inspection Levy: 0.5% of CIF.

To illustrate: a shipment with a CIF value of KES 1,000,000 and an import duty rate of 25% would attract duty of KES 250,000, VAT of KES 200,000 (16% of KES 1,250,000), IDF of KES 35,000, Railway Development Levy of KES 20,000, and KEBS Levy of KES 5,000. Total government charges: KES 510,000 on a million-shilling shipment. That is before the clearing agent's fee.

All of this is processed through KRA's Integrated Customs Management System (iCMS). You do not walk into a customs office with cash — entries are filed electronically, duties are paid through the banking system, and the release order is issued digitally.

Clearing Agents: You Need One

KRA requires that import declarations be filed by a licensed clearing and forwarding agent. You cannot file a customs entry yourself unless you are individually licensed. Clearing agents handle the customs entry, coordinate with KRA on any queries, pay duties on your behalf (you fund them first), and obtain the customs release order that lets the goods leave the port or airport.

Agent fees vary by shipment complexity and value: KES 10,000–50,000 per consignment covers most commercial imports. Get itemised quotes from two or three agents before committing — the range in pricing is wide, and the cheapest agent is not always the fastest at resolving customs queries.

The Export Side: Less Paperwork, But Not Zero

Kenya does not require a general export licence for most goods, which makes the export process considerably lighter than importing. You register with KRA for exports (covered by your company KRA PIN), file an Export Declaration Form through iCMS, and the goods leave. For most manufactured goods, machinery, and services-related exports, that is the extent of the formal process.

Where additional documentation applies:

• Fresh produce (flowers, vegetables, fruits): KEPHIS phytosanitary certificate, confirming the produce is pest-free and meets the importing country's plant health requirements. This is mandatory for Kenya's significant horticultural export sector.
• Food products: KEBS export certificate confirming the goods meet standards for the destination market.
• Agricultural goods generally: Check KEPHIS requirements; some crops have specific export conditions depending on the destination country's regulations.

Duty Drawback: How to Recover Import Duty on Re-Exported Goods

This is the mechanism that most import/export businesses either do not know about or find too complicated to bother with. It is worth understanding because it can meaningfully reduce the cost of manufacturing for export.

The duty drawback scheme works like this: you import raw materials or components, pay import duty on them, use them to manufacture finished goods, and then export those finished goods. Because the inputs were ultimately used in exports rather than consumed in the local market, KRA will refund the import duty you paid on those inputs. The duty was a tax on consumption — since the goods left Kenya, the consumption tax should not apply.

To claim a drawback, you need three things to align cleanly:

1. Production records showing which imported inputs went into which finished products, and in what quantities. Bill of materials documentation, batch records, or manufacturing logs all work — the point is to trace the duty-paid input to the exported output.
2. Export documentation confirming the finished goods left Kenya: the export declaration, the bill of lading or airway bill, and the destination customs entry if available.
3. Original import duty receipts showing exactly what duty was paid on the specific inputs. KRA will not process a drawback claim without payment proof.

Claims are submitted to KRA's customs department. Processing takes three to six months on average — sometimes longer when KRA is behind on approvals. The refund comes as a cash payment or as a credit against future duty obligations. For a garment factory importing fabric, a food processor importing raw ingredients, or an assembly operation importing components, the amounts involved can be substantial enough to materially affect margins.

The businesses that benefit most from duty drawback are those processing goods at scale: the per-unit refund may be small, but across thousands of units it compounds. The administrative overhead of maintaining the records is the main friction — but any operation with a functioning stock management system already captures most of what KRA requires.

Incoterms: Why the Freight Pricing Basis Matters for Duty

Kenya calculates import duty on the CIF value — Cost, Insurance, and Freight to the Kenyan port. This matters when you are negotiating purchase prices with overseas suppliers, because the basis of the quoted price determines what KRA will use as the customs value.

If your supplier quotes FOB (Free on Board — they deliver to the origin port, you arrange shipping from there), you need to add freight and insurance costs to arrive at the CIF value that KRA will use. If they quote CIF, the duty base is the invoice price itself. Either way, KRA customs has access to freight benchmarks and will challenge declared values that look unusually low for the shipment type.

Undervaluing goods at customs is one of the most common mistakes importers make, sometimes deliberately and sometimes because the supplier provides an incomplete commercial invoice. KRA's iCMS uses CRSP (customs reference selling prices) for common import categories — if your declared value is significantly below the reference, customs will re-assess the duty on the higher value and can add a penalty on top. The re-assessment resolves slowly and can hold up your goods in the meantime.

Four Mistakes Worth Avoiding

Skipping PVoC inspection. The most expensive mistake in Kenyan importing. Goods held at Mombasa for local testing cost money in storage every day they wait. Arrange the inspection before the goods leave the factory — not after they have already shipped.

Getting the HS code wrong. The Harmonised System code determines your duty rate. Misclassifying goods can mean paying too much, or — worse from KRA's perspective — too little, which triggers a reclassification, a back-duty charge, and potentially a penalty. If you are unsure about the correct code for a product, ask your clearing agent or apply to KRA for an advance ruling on classification.

Not registering for VAT before importing. Import VAT is charged whether you are VAT-registered or not. But if you are not registered, you cannot reclaim that VAT as input tax against your sales. For a business buying goods for resale, that unrecovered VAT is a permanent cost — not a cash-flow timing issue but money you cannot get back.

Paying a foreign supplier from a personal account. Beyond the paper-trail issues already mentioned, some banks flag personal-account international transfers for anti-money-laundering review. Use the company account, keep the remittance advice, and match it to the commercial invoice from the supplier.