Kenyans will pay more for imported used motor vehicles if the recommendations by President Uhuru Kenyatta on the Excise Duty Bill 2015 are upheld by Parliament.The President declined to assent to the Bill after it was passed by MPs on August 27. In his memorandum to parliament, he instead seeks to uphold rates of excise duty for motor vehicles as proposed by National Treasury Cabinet Secretary Henry Rotich in the budget in June.

Treasury wants importers of used vehicles that are aged less than three year pay to Sh150,000 in excise duty while importers of those over three years from the date of first registration to pay
Sh200,000 per unit.

However MPs reduced the duty to Sh100,000 and Sh150,000 per unit respectively.

“…the proposed change, if adopted, will have serious implications for the exchequer in terms of reduced revenue which will affect budget expenditure already approved by the national assembly,” reads the president’s memorandum, currently before the House.

It says the extra amount collected will help fund the national budget. If the president’s memorandum is upheld, it will replace the current excise duty tax regime where importers pay 20 per cent of Customs Value + Import Duty.

Import duty is currently 25 per cent of the customs value of the vehicle (Invoice value + insurance + freight charges).

Imports are also charged 16 per cent Value Added Tax of (customs Value + import duty + excise duty). An import declaration fee of 2.25 per cent of the customs value is also charged
subject to a minimum of Sh5,000, payable in advance on application.

Car importers are opposed to Rotich’s and the President’s position saying if adopted, it will cut imports to Kenya by 50 per cent, from the current average 9,000 units per month to 4,500 units. He said the extra cost will be passed on to buyers making vehicles expensive.