Motorists have a reason to smile after Kenya Revenue Authority (KRA) was stopped from raising taxes on the importation of used cars.
A report by Business Daily on Tuesday, August 11, indicated that the taxman had been stopped from raising the tax by as much as 10% to increase the adjusting base to 40%.
A new set of guidelines under the Current Retail Selling Price (CRSP) KRA published on July 7 listed new pricing of second hand cars after taking into account depreciation.
Unimpressed by the increase, Car Importers Association of Kenya filed a suit highlighting that the prices had been increased way above the country's inflation rate.
“The petitioner further accused the respondent (KRA) of increasing the current CRSP values by 10 percent to 40 percent which is contrary to the inflation rate of seven percent recorded between 2018 and 2019.
“Some of the CRSP values given are higher than the value of purchasing a new motor vehicle from the franchised (local motor vehicle dealers). For example, the undiscounted value of a brand new Subaru Forester OXC (SJD) is Ksh 4.38 million yet the CRSP value given by the respondents for the same vehicle is Ksh 6.39 million," argued the association.
The association was seeking to have the implementation of the new catalogue stopped.
Justice Mugure Thande ordered the complainant to file its submissions by August 18 while the taxman was asked to present theirs by September 1, 2020.
“Pending the hearing and determination of the petition herein, a conservatory order is hereby issued restraining the respondents (KRA) from implementing the new CRSP values from July 7, 2020,” ruled the judge.
In 2019, the state had sought to set the age limit of imported second cars to five years from eight years but the move was shelved due to lack of public participation.
In the new requirements that had been floated by the then Trade CS Peter Munya (Currently Agriculture CS), the engine capacity of the cars was expected to be 1,500cc.
A typical vehicle attracts an import duty of 25%, an excise duty of between 25% and 35% as well as value added tax of 16%.
The ruling temporarily suspended the tax raise but those who had already paid the fee would not receive refunds.
The case will be mentioned on September 22, 2020.
