List Of Increased Taxes For Second-Hand Car Importers Effective September 2023

• President William Ruto directed the Kenya Revenue Authority (KRA) to harmonise the valuation parameters of imported second-hand vehicles
• KRA announced new depreciation rates for used car importers at a maximum of 65%, effective September 1, 2023
• The new rates translate to an increase in corresponding taxes, including import duty, excise duty, and value-added tax (VAT)

Kenyans will have to dig deeper into their pockets to buy an imported second-hand vehicle from dealers.

This followed a new schedule released by the Kenya Revenue Authority (KRA), capping the maximum depreciation rate for used cars at 65%.

Used car value depreciation

KRA reduced the rate for the value of the vehicle not more than eight years from the previous calculations of 70%.

The move came after President William Ruto directed the taxman to harmonise the valuation parameters of imported used cars.

"In compliance with the president's directive in July 2023, the custom department will apply the depreciation schedule adopted by the East African Community Council of Ministers. All staff are required to adhere to this valuation with effect from September 1, 2023, said KRA acting commissioner for customs Pamela Ahago, as quoted by Business Daily.

The change in the depreciation rate translates to over 14% in taxes including import duty, excise duty, and value-added tax (VAT).

Import duty

In July 2023, the EAC increased the import duty to 35%, sparking an increase in the prices of used cars.

The regional trading bloc approved the raising of the import duty on motor vehicles under the common external tariff amid the depreciating shilling.

This saw car dealers increase the price of a car worth KSh 998,261 by over KSh 120,000.

The new depreciation schedule raising the import and other taxes by more than 14.29% could see importers the prices to consumers.

Excise duty

Imported car excise ranges between 20% and 35% of customs value and import duty.

An increase in import duty, therefore, translated to a rise in excise tax charged on imported used cars.

A vehicle with a selling price of KSh 3.27 million will now be required to pay KSh 1.09 million in total tax, up from KSh 939,221.

Value Added Tax (VAT)

The depreciation rate determining the value of the used car will also be significant in determining the Value Added Tax (VAT).

For a car that has not more than eight years of manufacturing, the depreciation rate of 65% from the previous 70% means 5% of the value will be added to import tax, thus affecting VAT as well.

Toyota Vitz selling at KSh 1.87 million will require the importer to pay a tax of KSh 0.58 million, up from 0.49 million.

KEBS stops importation of 2015 cars

KRA said the schedule applies to a car not exceeding eight years, with a vehicle more than one year or less than 2 years of manufacturing attracting 20% depreciation.

This is in line with the Kenya Bureau of Standards (KEBS) move to stop the importation of second-hand vehicles, whose first year of registration is 2015.

The agency noted that all second-hand vehicles shipped into Kenya must comply with KS 15:15:2000, which is the standard code of practice for the inspection of cars.