Buyers GuideCar Reviews

KRA raises taxes on used Mercedes, Mazda imports

The Kenya Revenue
Authority (KRA) has rebased its taxation of used car imports, raising the duty
payable on prices of some Mercedes and Mazda models by more than 50 per cent.
The higher taxes will
in turn 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.
“Mazda and Mercedes
were the affected models in the latest duty increase brought by KRA’s review of
vehicles’ retail selling prices,” said Charles Munyori, KABA’s
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
Impact of higher tax base on 8-year car imports
Changes took effect from June
Mazda Axela (1.8L,2WD)
Mazda Axela (1.8L, 4WD)
Mercedes E250 CGI (1.8L)
The price escalation
comes after the taxman raised the base prices which are used to compute the
effective taxes paid on second-hand imports.
This means 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.
The taxes charged on used
cars average 40 per cent of the total cost of the units, making the levies a
major determinant of the final yard prices that includes markups of up to
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.

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