Home Business High court stops tax raise for used cars

High court stops tax raise for used cars

The Mombasa High Court has halted the tax raise proposed by the Kenya Revenue Authority (KRA) on used car imports.

Kenya Revenue Authority published a new Current Retail Selling Price (CRSP) on the 7th of July. This is a database of initial prices of new motor vehicles in Kenya that would form the basis for taxing second-hand cars. The new rate is reached by factoring in the units’ depreciation then setting a standard price for the import.

The high court adjusted the base on which the various levies were reached by up to 40 percent.

Car Importers Association of Kenya (CIAK) filed a motion to halt the implementation of the new levies. The CIAK represents the top eighty dealers of used cars in Kenya.

The dealers argue that KRA had not consulted them during the preparation of the current retail selling price as required by the constitution.

They also argue that the new CRPS has exaggerated prices and is inflated. They stated that:

“Some CRSP values given are higher than those of the franchised’s value of purchasing a new motor vehicle. The value of a brand new Subaru Forester (SJD) for example is 4.38 million shillings, the CRSP value that KRA gives for the same vehicle is 6.39 million shillings.” 

Justice Mugure Thande ruled that:

“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 the 7th of July, 2020.”

He ordered the importers to file their submissions by the 18th of August, while KRA was asked to present theirs by the 1st of September 2020.

Justice Mugure’s ruling suspended the tax raise temporarily, although those who have already submitted payments on the disputed terms will unfortunately not receive a refund.

The case will be heard on the 22nd of September 2020.

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