Several stakeholders including car importers have decried the recent Current Retail Selling Price (CRSP) charts by Kenya Revenue Authority (KRA). Car Importers Association of Kenya (CIAK) is demanding suspension of the new tax index to allow for consultations. CIAK has cited detrimental effects in a price increase of used imported vehicles.
CIAK Chairperson, Peter Otieno sent a letter on behalf of the association to KRA asking for suspension of the new taxes. The letter cited lack of involvement of CIAK in drafting new taxes, yet they are players in the industry. Further, the letter aimed to stop the implementation of the new CRSP taxes until pending issues raised were resolved. The letter was addressed to the commissioner of Customs and Border Control and the commissioner general of KRA.
Mr. Otieno said that efforts to reach out to KRA’s Valuation and Tariff department had not been responded to. The chairman added that the sudden increase in tax by almost 68 percent was unacceptable. He said that KRA was not responding to their grievances and had gone ahead to effect the new charges.
Otieno said that KRA had no basis for the tax increment as the increased values had targeted vehicles imported in bulk. This was despite the fact that these vehicles are priced differently with some higher than local vehicles. He said that the association believed that the price of a 2011 manufactured vehicle could not possibly be higher than one currently being produced. Similarly, a 2011 car usually should have reduced costs in 2018 due to new variant models in the market. He added that such high taxation would rob the public of their properties leading to a collapse of the industry.
CIAK held discussions with KRA back in 2004 whereby they proposed that CRSP used to benchmark tax index should come from local importers. The new taxes took effect on 5th February, this year. High-end vehicles such as the 3500cc Lexus R450 is among many others that have been affected.
A second hand Lexus R450 that was priced at KSh6.9 million last year has attracted a 63 percent increase in KSh1.2 million excise duties. It now retails at KSh11.5 million.