Auto insurance companies risk penalty on failure to collect and remit to the Kenya Revenue Authority (KRA) the annual taxes on motor vehicles as prescribed in the Finance Bill 2024.
- •A proposal in the bill puts the responsibility on insurance companies to collect the motor vehicle tax and remit within five working days after issuing a motor vehicle insurance cover.
- •An insurer who fails to collect and remit motor vehicle tax shall be liable to pay a penalty equivalent to fifty per cent of the uncollected tax and the actual amount of the uncollected tax.
- •The new proposal, which is seeking new avenues to mobilise money for the government, has created the motor vehicle tax to be paid on the value of a car provided that the amount of tax payable is not less than KSh 5,000 and not more than KSh 100,000.
If passed, the value of a motor vehicle will be determined on the basis of the make, model, engine capacity in cubic centimetres and year of manufacture.
However, the motor vehicle tax shall not be payable in respect of an ambulance, or a motor vehicle owned by the national government, county government, Kenya Defence Forces, National Police Service, National Intelligence Service or a person exempt from tax under the Privileges and Immunities Act.
The Finance Bill has been submitted by the Cabinet Secretary for the National Treasury and Economic Planning and formulates proposals relating to revenue raising measures including liability to, and collection of taxes.
It amends the Income Tax Act, the Value Added Tax Act, the Excise Duty Act, The Tax Procedures Act and the Miscellaneous Fees and Levies Act (Cap.469C).
The Bill also amends other pieces of legislation relating to fees, levies and management of public funds. It further proposes to amend the First Schedule to the Kenya Revenue Authority Act to remove the mandate of collecting charges and fees payable under the Civil Aviation Act from the Kenya Revenue Authority following the transfer of the same to the Kenya Civil Aviation Authority.
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