The High Court of Mombasa has recently declared the current tax imposed by the Kenya Revenue Authority on second-hand cars illegal. Therefore, the taxes imposed on used motor vehicles are to drop significantly in the coming months.
The Kenya Revenue Authority has been using the price quotations that are used by new vehicle dealers as the main basis for determining the import duties and other levies on second-hand cars that are shipped from overseas.
The car dealers complained that the starting quotations (Current Retail Selling Prices, CRSP) were high thus leading to unfair taxes that ran into millions of shillings on the used cars.
They also argued that the process was unconstitutional as the dealers are locked out resulting in no public participation.
The Car Importers Association of Kenya filed the case and the judge ruled in favour of the petitioners and declared the Kenya Revenue Authority’s taxation on used cars to be unfair.