This archive report was first published on 23 October 2019.
The Kenya Revenue Authority's (KRA) vehicle tax computation formula has been ruled illegal by the High Court, dealing a significant blow to the taxman's discriminatory assessment of tax due.
According to the court's verdict, KRA has been relying solely on prices supplied by new car dealers, which are often higher than showroom prices, to compute vehicle taxes.
This has led to importers of second-hand cars being hit with higher levies than anticipated, causing them to abandon their vehicles at the port, only for KRA to later auction them at throwaway prices.
However, the court has ordered KRA to include used car dealers in the consultations that will inform the next computation of prices, bringing a welcome relief to the industry.
The ruling raises questions about how such a discriminatory tax policy was left to stand for so long and whether other sectors are similarly crumbling under the weight of unfair taxation.
Published on October 23, 2019, at 17:19, this editorial highlights the need for KRA to right its wrongs and adopt a fairer approach to taxation.
