This archive report was first published on 22 October 2019.
On October 22, 2019, the High Court in Mombasa delivered a significant ruling that could ease the burden on second-hand car importers in Kenya. The court declared that the Current Retail Selling Price (CRSP) formula used by the Kenya Revenue Authority (KRA) to calculate import duties on used vehicles is unconstitutional and punitive.
The ruling, made by Justice Eric Ogola, means that the amount of taxes paid on used motor vehicles is set to drop, which might also see the selling price drop, further passing benefits to the end buyer.
According to a report by the Business Daily, KRA has been using price quotations from dealers of new vehicles – such as Toyota Kenya – as the basis for calculating import duties and other levies on second-hand cars. This has resulted in unfairly high taxes running into millions of shillings for those dealing in used imports.
Used car dealers argued in court that the starting quotations, known as current retail selling prices (CRSP), are inflated and therefore result in unfairly higher taxes. They also say the process is unconstitutional since it locks them out, meaning that there is no public participation.
“A declaration that for purpose of continuity and in the interest of the public the transactions already effected via the said CRSP … shall continue to apply until such a time as the respondents will establish a new CRSP value in accordance with the law within 12 months from the date of this judgment,” Justice Ogola ruled.
