Used cars at the Port of Mombasa. Photo/CarBazaar
Taxation of used imported cars has been rebased by The Kenya Revenue Authority (KRA) raising the duty payable on prices of some Mercedes and Mazda models by more than 50 per cent.In turn the higher taxes will increase the prices of the models by between Sh145,000 and Sh364,000, according to the Kenya Auto Bazaar Association (KABA) which represents second-hand car dealers.Charles Munyori, KABA’s secretary-general said,“Mazda and Mercedes were the affected models in the latest duty increase brought by KRA’s review of vehicles’ retail selling prices".Total taxes on the Mercedes E250 CDI with a 1.8-litre engine rose to Sh910,801 from the previous Sh546,481, a two-thirds increase.A 1.8-litre, two-wheel drive Mazda Axela is now taxed Sh397,437 or 57.7 per cent higher compared to Sh252,017 based on the previous tax computation.Duty on a four-wheel drive Mazda Axela with a 1.8-litre engine jumped by a similar margin to Sh413,523 from Sh267,361.This comes after the taxman raised the base prices which are used to compute the effective taxes paid on second-hand imports.Meaning that while no new taxes were introduced, importers are nonetheless incurring higher absolute taxes to ship in the cars sourced largely from Europe and Japan.Used cars attract an import duty of 25 per cent, excise duty of 20 per cent and valued added tax (VAT) of 16 per cent payable cumulatively and in that order.Calculation of the taxes is based on the current retail selling price (CRSP) of specific models, an amount that is adjusted for depreciation at a rate of 10 per cent per year.Insurance and freight charges are added to the adjusted CRSP to arrive at the custom value.Imports of used cars is capped at eight years from the date of manufacture, a move that has seen most dealers ship in models approaching that age to benefit from lower taxes.
Image JD POWER