The Kenya Revenue Authority (KRA) is working on a new system for determining the tax value of imported second-hand vehicles, a move that could affect how much Kenyans pay when bringing used cars into the country.
KRA Commissioner General Adan Mohamed said the authority was in discussions with players in the motor vehicle industry to introduce the second version of the Current Retail Selling Price (CRSP) schedule.
Speaking on Friday, November 13, during the Institute of Certified Public Accountants of Kenya (ICPAK) 43rd Annual Seminar in Mombasa, Mohamed said the revised system would take into account the country of origin and age of a vehicle when determining the applicable duty.
“On the issue of CRSP, we are in discussions with the motor vehicle industry to introduce CRSP Version II so that we can ensure that if you import a car from a particular country, depending on its age, that is the duty you are able to pay,” he said.
The CRSP schedule is used by KRA to determine the customs value of imported used vehicles. It considers factors such as the vehicle’s make, model, specifications and year of manufacture.
Under the current system, the authority does not depend entirely on the price indicated on an importer’s purchase documents. Instead, it uses the CRSP reference value and adjusts it based on the vehicle’s age before calculating the taxes due.
The resulting value is used to determine import duty, excise duty and Value Added Tax (VAT).
This means that two people who buy vehicles at the same price may end up paying different amounts in taxes depending on the models, specifications and ages of their cars.
For instance, a person who buys a used vehicle for Ksh2 million may not necessarily have its taxes calculated using that amount. KRA first establishes the vehicle’s customs value under the CRSP system.
The proposed second version could change the reference values assigned to different vehicle models, potentially affecting the amount importers pay in taxes.
However, KRA has not yet released the revised schedule or announced when the new valuation system will take effect.
The announcement comes days after the authority changed the process for releasing imported second-hand vehicles to licensed dealers.
Under the new arrangement, dealers can move cleared vehicles from customs yards to their business premises as they look for buyers, without completing the formal registration process immediately.
They are, however, required to pay all applicable customs duties, taxes and levies before the vehicles are released. NTSA registration fees and levies are deferred until a buyer is found.
The changes followed a directive by President William Ruto through the National Transport and Safety Authority (NTSA).
Dealers must obtain a Kenya Dealer identifier from NTSA, which is linked to the vehicle’s chassis number and captured in the customs system before the car is released to their yards. Formal registration is completed after the vehicle is sold.
