This archive report was first published on 22 October 2019.
On October 22, 2019, the High Court in Mombasa delivered a landmark ruling that could significantly reduce taxes on used motor vehicles imported into Kenya.
The court declared the current tax computation formula used by the Kenya Revenue Authority (KRA) for used motor vehicles illegal, citing that it was unconstitutional and resulted in unfairly higher taxes for used car dealers.
The ruling was in favor of the Car Importers Association of Kenya, who argued that the current retail selling prices (CRSP) used by KRA were inflated and resulted in higher taxes.
According to the court, the CRSP used by KRA were sometimes higher than the actual showroom prices, leading to unfairly high taxes on used cars.
Justice Eric Ogola ordered KRA to consult used car dealers when creating the next price list, and to establish a new CRSP value within 12 months from the date of the judgment.
Used car dealers estimate that the losses brought by the price divergence at hundreds of thousands to millions of shillings for each imported car.
The ruling is expected to promote transparency and fairness in the taxation of used motor vehicles, and could lead to lower taxes on models that have been unfairly overcharged in recent times.
