Kenya Ports Authority has reported a rise in the number of ship where at least eight were expected to dock at the Port of Mombasa between last Friday and next week Tuesday, October 10, bringing in more than 4,130 units in less than two weeks.
“This is a notable rise with the carriers expected to discharge a cumulative 4,134 motor vehicle units. During this period, a total of 45 vessels will call the port,” KPA said.
On average, Kenya has been importing about 7,000 units per month, numbers importers now say are likely to go up.
The rise has been attributed to Kenya Revenue Authority's decision to harmonise the valuation parameters of used motor vehicle units.
It has since shifted to a bloc year on taxation of second-hand cars, meaning units that arrive even as late as December are paying the same taxes as those imported in January, same year.
The taxman has previously applied the first month of registration while other government agencies, among them Kebs, were applying full year.
The practice has been that if the date of first registration is unknown, then the last month of the calendar year was used for purposes of taxation.
“This resulted in importers raising concerns especially where the documents presented do not have the date of first registration,” KRA said, as it moved to effect the new rule on September 1.
According to the Car Importers Association of Kenya (CIAK), the decision has encouraged importers to bring in units irrespective of the time of the year, a trend that is expected to stabilise the used-cars market.
“What is happening now is that we have done away with the good and bad months. People feared to bring in vehicles say in November because they would be subjected to the following year’s taxes which used to be higher,” CIAK national chairman Peter Otieno told the Star yesterday.
The association has further called on the government to allow showrooms to register vehicles at the time of selling, as opposed to the current requirement where registrations is required before the unit is cleared from the Container Freight Stations.
“This has the potential to revenue to government by more than 50 per cent as it will help tame price drops on older registration numbers,” Otieno said.
Prices however remain high on the continued weakening shilling to the US dollar, and revised taxes by the government.
Kenya has adopted the EAC depreciation schedule, which has now capped the maximum depreciation rate at 65 per cent, from a previous 70 per cent.
The decision made last month has seen taxes increase by at least 15 per cent for older units of
more than seven years and less than or equal to eight years, the maximum age limit of used imports allowed into the country.
Dealers and importers of both second-hand cars and knocked-down units imported by local assemblers (new cars) have also been hit by a 35 percent import duty.
This is after the East African Community approved an application by Kenya to raise duty on motor vehicles under the Common External Tariff (CET), from a previous 25 per cent.
According CIAK, both the import duty and excise duty have been raised to 35 per cent, a move that has resulted in an increase of between Sh50,000 and Sh100,000 for small units.
Prices of high-end vehicles have gone up by between Sh500,000 and Sh1 million depending on make and capacity.
The higher import duty is in addition to excise duty, which now ranges between 25 per cent and 35 per cent depending on the size of the engine, Value Added Tax at 16 percent, and other charges such as IDF, which have pushed up car prices.
This has resulted to a sharp increase in prices of imported cars including those carrying 10 or more passengers, station wagons, SUVs and those involved in the transportation of goods among others.
For instance, a Suzuki Alto, common in the taxi business, is now going for between Sh650,000 and Sh700,000, up from Sh550,000, CIAK confirmed.
Nissan Note which was selling at Sh750,000 is now on average asking Sh950,000.
Toyota Fielder is going for Sh1.7 million up from about Sh1.2 million, while a used imported Probox is selling at between Sh1.15 million and Sh1.2 million, up from Sh850,000.
