The prices of several models of imported second-hand vehicles have risen as high as Sh429,000 due to the controversial computation of import duty, hitting buyers who are now forced to dig deeper into their pockets.
For example, the cost of a Honda Insight 2019 model with a 1500cc engine has jumped to Sh2.6 million from an average of Sh2.2 million, after its duty charge rose to Sh791,000 from Sh362,000.
A 2019 model of the 1200cc electric Nissan Note is now going for an average of Sh1.4 million from Sh1.15 million, after taxes on the unit rose by Sh210,000 to Sh448,000.
Dealers say that new taxes that the Kenya Revenue Authority (KRA) is charging are clouded in secrecy, adding that most of the affected vehicles are not captured in the vehicle price list published in 2019, and which forms the basis of computing taxes for imported used vehicles.
The surge in duties has hit buyers and dealers, triggering slow sales.
The contested computation of the taxes comes at a time when KRA is barred from enforcing the new list that forms the basis of computing taxes (Current Retail Selling Price).
‘You bring a vehicle like a 1000cc Toyota Passo expecting to pay duty of Sh220,000, but then KRA tells you that it is Sh282,000. The small engine models, whose popularity is fast rising, are the most affected,’ Charles Munyori, Secretary General of industry lobby, Kenya Auto Bazaar Association, said.
Most of the affected cars have, over the years, become popular, especially among ride-hailing operators like Uber and Bolt, and the middle class, largely due to their affordability and small engines.
The price of a Toyota Raize 2019 model, with a 1000cc engine, has jumped to an average of Sh2.65 million from Sh2.35 million, mirroring the Sh245,000 rise in duty to Sh518,000.
Duty on an imported used Nissan Dayz 2019 model with an engine of 660cc has jumped by Sh92,000 to Sh247,000, pushing its car-yard price to an average of Sh980,000 from Sh850,000.
‘If a car model is not in the CRSP of 2029, then KRA is mainly using the manufacturer’s retail price in the source market. This has the impact of significantly increasing prices of the cars whose prices went up in the country of origin,’ added another dealer who sought anonymity.
KRA had not responded to queries on the matter, which has since sparked uproar as dealers grappled with reduced orders and increased costs of doing business.
The High Court last year barred KRA from enforcing a new CRSP until the hearing and determination of a case where dealers sued the taxman for lack of sufficient public participation in coming up with the new CRSP.
The new CRSP was to take effect from July 1, 2025, and would have seen prices of some imported used vehicles jump by upwards of 145 percent.
KRA charges five taxes on imported second-hand vehicles. These are import duty of 35 percent, excise duty of between 20-35 percent based on the engine size, and Value Added Tax of 16 percent.
The units also attract an Import declaration fee of 2.5 percent of the customs value and a railway development levy of two percent of the customs value in each case.