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Used car sales hit by tax regime

Second-hand car dealers are still grappling with deferred market sales since the introduction of new tax regime by Kenya Revenue Authority (KRA).

The Car Importers Association of Kenya (CIAK) chairman Peter Otieno says the market sales has recorded a 20 per cent decline in the first quarter of the year despite relative calm witnessed in the country.

“We are not doing well especially after introduction of the new tax regime by KRA. Many of the importers are adopting a wait-and-see situation,” said Otieno.

The new taxes have seen high end models like the Toyota Land Cruiser attract a duty of Sh2.3 million to sell at Sh21.6 million.

In 2017 the same model was selling at Sh17.9 million and attracting a Sh1.9 million duty, translating to a 20 per cent increase. Lexus R450 (3500) cc will now retail at Sh11.5 million and attract a duty of Sh1.2 million. Last year the same model retailed at Sh6.9 million and attracted a duty of Sh768,127, a 63 per cent increase.

A Honda CRV RM4 (2400) cc will now retail at Sh7.3 million up from Sh5.8 million.In a letter dated January 30, Otieno said KRA made the decision without involving them.

Calculation of taxes for a used car is based on the current retail selling price of specific vehicle models, which is then adjusted for depreciation at the rate of 10 per cent per year.

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