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Car importers ask KRA to go slow on implementing new pricing model

 19 Feb, 2018
NAIROBI, KENYA: Kenyans should be ready for a rise in prices of imported used cars following tax increase by the Kenya Revenue Authority.

Members of Car Importers Association of Kenya (CIAK) have put the average increase of the vehicles retail prices this year to 43 percent following the new KRA taxation regime.

They want KRA to suspend the Current Retail Selling Price (CRSP) chart introduced recently until industry concerns are resolved even as it asked Kenyans to brace themselves for the high prices.

CIAK national chairman Peter Otieno argued that the new CRSP has caught importers by surprise as it has not been placed on the KRA website or discussed with the industry players making it difficult to sell the affected fleet of vehicles that has been attracting storage charges.

Otieno noted that a Toyota Alphard of 2360 cc eight-seater that a CRSP of 3,088,590 has now been moved to Sh5,441,850, attracting additional duty of Sh203,958 or 69.2 percent.

Lexus RX450 of 3500cc that was valued at Sh6,982,000 last year is now priced at Sh11,525,368 attracting additional duty of Sh485,670 or 63.2 percent.

A Coaster 2WD of 3661 cc that was valued at Sh3,830,000 last year is now pegged at Sh5,738,000 and attraction Sh203,958 more duty or 47.3 percent.

A Toyota Land Cruiser that was valued at Sh17.9 million last year now goes for Sh21,671,820 under the new CRSP index representing an estimated Sh403,195 in additional duty.

Mr Mohamed Ramzan of Inter Dunia Mombasa Limited, a motor vehicle dealer on January 18 this year raised the issue of raised CRSP with KRA’s chief manager in charge of Valuation and Tariff.

He challenged the use of CRSP raising the price of his imported Alphard vehicle from Sh3,088,590 to Sh5,441,000.

Otieno said they were contesting the new CRSP because hundreds of vehicles imported last year are not competitive in the market currently.

“We cannot get any profit for the vehicles already imported that have been subjected to the new CRSP and that is why we want it suspended to allow for consultations,” he said.

In a letter dated February 10, this year, Car Importes Association of Kenya (CIAK) asked the Commissioner of Customs and Border Control Julius Musyoka to call for the meeting.

“As the head of the tax department, you are better suited to settle this matter once and for all. Bearing in mind the contents of paragraphs 4 and 5 of your letter, it is only proper that a meeting be scheduled so as to enable our members demonstrate the issues raised in our letter dated 30 th January, 2018 thereby giving you an opportunity to make the best determination in this matter,” said CIAK national chairman Peter Otieno in the letter.

Otieno said they were reluctant to move to court because they have faith that KRA would resolve the dispute amicably.

He said they were willing to pay taxes but they were seeking a clarification on the current taxation rates.

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