Kenya Revenue Authority slaps second hand car buyers with hefty custom duties

Kenya Revenue Authority (KRA) has revised the Current Retail Selling Price (CRSP) targeting imported second hand vehicles which would see prospective buyers dig deeper into their pockets in order to afford their prized toys.

As per the new taxes, high end models like the Toyota Land Cruiser URJ201/202-GNT V8 (5663) cc will now retail at Sh21.6 million ($216,000) and attract a duty of Sh2.3 million ($23,000), a sharp increase from Sh17.9 million ($179,000)and Sh1.9 million duty ($19,000), the same model was fetching in 2017, translating to 20 per cent increase.

The Lexus R450 (3500) cc will now retail at Sh11.5 million ($115,000) and attract a duty of Sh 1.2 million ($12,000), a 63 per cent increase as the same model retailed at Sh6.9 million ($69,000)and attracted a duty of ShSh768, 127 ($7,681.27) last year.

A Honda CRV RM4 (2400) cc will now retail at Sh7.3 million ($73,000) while attracting a duty of Sh801,719 ($80,17.19), a 25 per cent increase from last year.

In 2017, the same model retailed at Sh5.8 million ($58,000) with a duty of Sh641,296 ($6,412.96).

Car importers in the country have decried the sharp increase in duties and written to the taxman demanding suspension of the new Current Retail Selling Price (CRSP) arguing it would spell doom to the industry.

In a letter dated January 30, Car Importers Association of Kenya (CIAK) chairman, Peter Otieno, said the Kenya Revenue Authority (KRA) made the decision without involving them.

“We wish to register our humble request to you that since we have not resolved the disputed values that were put to the attention of your department earlier, we hereby appeal that you suspend the CRSP that is due to be implemented with effect from February 5 until we agree so that CRSP becomes ours for all and not KRA alone,” the letter addressed to the commissioner in-charge of Customs and Border Control and copied to the KRA Commissioner-General says in part.

Calculation of taxes for a used car is based on the CRSP of specific vehicle models, which is then adjusted for depreciation at the rate of 10 per cent per year.

Insurance and freight costs are then added to CRSP to arrive at the custom value.

KRA is yet to respond to the letter