Car importers warn of industry collapse over new KRA vehicle tax valuations

Car importers have opposed the Kenya Revenue Authority’s (KRA) new valuation list set to take effect from July 1.

In a statement on June 4, the ="https://www.standardmedia.co.ke/business/motoring/article/2001519287/before-you-ship-that-car-heres-what-you-will-owe-in-taxes-in-kenya">association warned it could crush the used car market, cause job losses and reduce tax revenue<.

The Car Importers Association of Kenya (CIAK) has formally objected to the Current Retail Selling Price (CRSP) list, which KRA uses to calculate taxes on imported vehicles.

In a letter to the Commissioner of Customs and Border Control, the group said the new values are unjustified and were introduced without proper input from stakeholders.

“The final list disregarded critical input from stakeholders,” said Peter Otieno, the CIAK national chairman, adding,  “It’s like the consultations were just for show.”

Otieno said prices of commonly imported models had shot up by wide margins.

 For example, the Toyota Passo 990cc has been valued at Sh2.6 million, up 87 per cent from its previous CRSP.

The Nissan Vanette has doubled to Sh4.6 million, and the Toyota Probox jumped 91 per cent to more than Sh3.3 million.

Data from the updated list shows even higher prices for newer models.

The Aiways U5 electric SUV is listed at over Sh5.9 million, the Aiways U6 at Sh8.2 million, and the Audi 3.0 TFSI Quattro S Line at more than Sh16.2 million.

A small hatchback like the Audi A1 Sportback 1.0 TFSI is valued at Sh5.9 million.

“These prices are out of touch with our market. Even second-hand versions will attract duties most dealers and customers can’t afford,” Otieno explained.

CIAK said many vehicles are missing from the CRSP list altogether, including the Toyota Hilux, Subaru Impreza G4 and Toyota Fielder.

The group noted this adds uncertainty for importers who cannot estimate what they will pay.

“If so many cars are missing, why the rush to implement it?” Otieno asked.

KRA, in a public notice dated May 30, said the new CRSP list was developed after extensive stakeholder consultations and is available on its website.

The agency said it would be applied starting July 1 and urged dealers to familiarise themselves with it.

CIAK, however, dismissed the consultations.

“You denied the leaked list was yours, but now you've published it exactly as it was. So why pretend to engage?” Otieno noted.

The group also accused KRA of ignoring a depreciation structure it had submitted, which would allow for a gradual reduction in vehicle value based on age.

CIAK’s proposed table applied up to 85 per cent depreciation for vehicles older than seven years.

Otieno warned that the new list could reduce stock among small and medium importers by 70 per cent due to unaffordable duty.

He added that it risks job losses in clearing yards, local garages and showrooms.

The group listed several tax changes since 2019 that have increased the cost of car imports, including excise duty rising from 20 per cent to 35 per cent and import duty from 25 per cent to 35 per cent.

The Import Declaration Fee also increased from 2 per cent to 2.5 per cent, and the Railway Development Levy from 1.5 per cent to 2 per cent.

“You cannot kill the industry to raise revenue. In the end, you’ll get neither,” Otieno warned.

CIAK is demanding immediate suspension of the new list, a 90-day transition period and the formation of a joint technical team to review the CRSP valuations.

 It also referenced a 2018 High Court case and unresolved tax refund claims, accusing KRA of breaching court orders by publishing the list without clearance.