Starting July 1, 2025, car buyers in Kenya will face significantly higher prices for imported used vehicles. The Kenya Revenue Authority (KRA) has announced an update to its Current Retail Selling Price (CRSP) schedule, marking the first major revision since 2019. This change, which alters how taxes on second-hand cars are calculated, is expected to ripple through the auto market, hitting both affordability and sales volumes.
What is the CRSP?
The Current Retail Selling Price (CRSP) is a reference point used by the KRA to determine the tax liability on imported used cars. It reflects the market price of a new vehicle sold locally, adjusted for depreciation. The CRSP is instrumental in calculating multiple taxes levied on imported vehicles, including:
- Import Duty: 35% of the vehicle’s customs value.
- Excise Duty: Ranges from 25% to 35%, depending on engine size and age.
- Value-Added Tax (VAT): 16% on the sum of the customs value, import duty, and excise duty.
- Railway Development Levy (RDL): 2% of the customs value.
- Import Declaration Fee (IDF): 3.5% of the customs value.
These taxes collectively form a substantial portion of the cost of importing used cars into Kenya. With the CRSP update, all these calculations will now be based on higher reference prices, making car imports more expensive.
Why is the CRSP Being Updated?
According to Seraphine Anamanjia, Senior Manager at Ernst & Young, the revision is overdue:
“Since 2019, we have not had a change in the CRSP… within six years, a lot has changed, including vehicle prices. Kenyans expect more efficient motor vehicles, but this comes with a cost that has now been added to the CRSP.”
The KRA’s decision follows:
- Stakeholder Engagement: Consultations were held with industry players, including car importers, tax experts, and vehicle dealers.
- Market Dynamics: The old CRSP database excluded newer car models and did not account for currency fluctuations and rising global costs.
- Legal Compliance: The update aligns with a court ruling mandating public participation in tax-related changes.
How Much Will Prices Rise?
Industry experts warn of a steep increase in tax liabilities under the new CRSP. Common models like the Toyota Probox and Nissan Note will face dramatic hikes:
Vehicle Model | Old Duty Estimate (KSH) | New Duty Estimate (KSH) |
|---|---|---|
Toyota Probox | ~100,000 | >500,000 |
Nissan Note | 232,000 | ~500,000 |
Such increases will ripple across the used-car market, driving up showroom prices and squeezing budgets for potential buyers.
Impact on the Used-Car Market
Dealers are already expressing concerns about the market’s future. Peter Otieno, Chairperson of the Car Importers Association of Kenya (CIAK), paints a grim picture:
“Our industry is already dying. We used to import over 200,000 vehicles annually. Last year, we imported only 70,000 units. With these changes, vehicles will not be affordable.”
The rising costs are compounded by other challenges:
- High Shipping Costs: Global freight charges have surged post-pandemic.
- Forex Volatility: The Kenyan shilling has weakened significantly against major currencies, inflating import bills.
- Tighter Regulation: Increased scrutiny and compliance requirements add to the administrative burden and costs.
Government’s Perspective
Despite the backlash, the KRA maintains that the update is necessary to ensure fair taxation and reflect current market realities. Jossinter Syengo, Senior Manager at KPMG, explains:
“The valuation could have been influenced by exchange rate differences. In 2019, the US dollar was lower compared to today, so you would expect the exchange rate to impact the CRSP.”
The revision aims to:
- Align tax calculations with real-world vehicle values.
- Update the tax base to include newer car models.
- Close loopholes in the old system that led to under-valuation and revenue losses.
Read: How to File KRA Nil Returns on iTax in Kenya 2025
Implications for Buyers and Dealers
For buyers, the higher tax burden means increased prices across the board, from small cars to luxury models. Dealers, meanwhile, must navigate shrinking margins and declining demand. Ayub Mwangi, a car dealer, notes the ripple effect on financing:
“Saa hii watu ata wameshindwa kununua magari. Hata wenye madeni wameshindwa kulipa, inabidi ukikopa gari inachukuliwa na wenyewe.”
Preparing for the Change
Both buyers and dealers can take steps to adapt:
- Budget Adjustments: Expect higher upfront costs and factor them into purchase decisions.
- Early Imports: Buyers may consider importing vehicles before July 1 to avoid the new tax schedule.
- Market Research: Dealers should reassess inventory strategies, focusing on models with stable or predictable tax burdens.
- Financial Planning: Leveraging flexible financing options and consulting tax experts can help mitigate the impact.
Conclusion
The KRA’s updated CRSP schedule represents a major shift in Kenya’s vehicle import landscape. While it aims to modernize tax calculations and align them with market realities, the higher costs threaten to make car ownership an unattainable dream for many Kenyans. As the July 1 implementation date approaches, the industry—and consumers—must brace for a challenging transition.
