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Court suspends KRA’s new tax calculator for used vehicles
Second-hand cars at a yard in Mombasa. KRA recently updated the Current Retail Selling Price, on which six taxes are based. The update were due to take effect on July 1, 2025.
The High Court has temporarily suspended a freshly published price list for used motor vehicles, which was due to form the basis of taxes imposed on second-hand models arriving in the country from July 1, 2025.
The Kenya Revenue Authority (KRA) recently updated the Current Retail Selling Price (CRSP), on which six taxes are based, including excise and import duty after depreciation.
The new CRSP shows that the total tax on most vehicles, including Suzuki Swift, Mazda Demio and Toyota Vitz, would rise substantially, with some prices more than doubling.
Justice Joe Omido, sitting in Kisumu, suspended the directive by KRA pending the hearing of a petition filed by Elizabeth Akinyi.
Ms Akinyi, who described herself as a public-spirited Kenyan, argued that the pricing list was passed without adequate public participation in violation of Articles 118 and 201 (a) of the Constitution which require public participation in legislation and public finance matters.
“Prayers 2 and 3 of the application are granted on a temporary basis until July 17, 2025,” Justice Omido said. Prayer 2 and Prayer 3 sought suspension of the circular.
In a notice in May, KRA stated that the CRSP schedule for computing customs value for used motor vehicles imported into the country would take effect from July 1.
The KRA had announced that the change followed extensive stakeholder engagement, factoring in the feedback received.
The Commissioner for Customs and Border Control said the changes reflect several economic shifts since the last update in 2019, including new vehicle models, fluctuations in exchange rates and increases in key taxes.
Ms Akinyi, however, said the KRA only engaged car dealers, which cannot be termed adequate participation, but was merely cosmetic insofar as it excluded critical sectors of the public.
Through her lawyer Jackson Awele, Ms Akinyi said she learnt of the 2025 CRSP for the first time after the circular was issued on May 22, 2025.
“The 30-day notice by the 1st and 2nd respondents (KRA and Commissioner for Customs and Border Control) for implementation of the impugned CRSP is manifestly unreasonable, arbitrary, and whimsical,” she said in an affidavit.
Ms Akinyi pointed out that the typical import timeline from order to delivery takes approximately three to six months, assuming smooth execution and subject to ship availability and route schedules, shipping method choice and customs and port efficiency.
She pointed out that the 30-day notice for implementation was too abrupt and in violation of the legitimate expectation of importers-dealers and members of the public, who had budgeted for a placed shipment orders using the 2019 CRSP.
Some of the vehicles, she added, were already at sea.
She argued that the CRSP was hurriedly assembled and contains fundamental errors and omissions that called its accuracy as a tax base into question.
“For instance, it omits or fails to provide for several vehicle models imported into the country by car dealers and individual customers. In other instances, it erroneously matches car models with non-existent features, including wrong fuel types, chassis numbers, and attaches different values to the same car models,” she said.
Ms Akinyi said the deficiencies in the basis of valuation used by the KRA would lead to muzzling fair competition in the motor vehicle industry in favour of new vehicle dealers and consumers at the expense of used vehicle dealers and consumers.
The majority of the vehicles in Kenya are imported second-hand units, underscoring the huge impact that a new CRSP is set to have on the economy.
