KRA Tax Rulings Price Kenyans Out of the Used Car Market

Motor vehicle importers are warning that Kenya Revenue Authority (KRA) tax rulings have pushed vehicle prices up by more than 80 per cent in 2026. Many middle-income Kenyans can no longer afford used cars.

Importers say KRA has shifted from the established Current Retail Selling Price valuation method. They claim officials now conduct physical inspections at Container Freight Stations instead. This change, they argue, has created inconsistent duty charges across identical vehicle models.

How KRA Rulings Are Raising Car Import Taxes

Container Freight Stations are off-dock storage facilities at the Port of Mombasa. Ships transfer imported vehicles there for inspection and customs clearance. Importers say KRA officials issue internal rulings at these stations. These rulings then apply uniformly to all vehicles of the same model.

“Once they do that confirmation and raise the tax, it applies to all cars of that same model,” said Pepela Billy, a car importer. “From March or April onwards, anyone buying a car will be affected.”

ForwardPressKe has seen documents showing sharp tax differences on identical vehicles. A Mazda Demio imported earlier in 2026 attracted taxes of Sh259,007. A similar model imported weeks later cost Sh396,808 — a Sh137,808 difference. Taxes on a Toyota Succeed rose from Sh272,241 to Sh433,937 within the same period.

Billy gave a specific breakdown. Mazda Demio taxes jumped from Sh253,000 to Sh462,000. A Nissan Note E12, previously sold for Sh1.1 million, now retails for nearly Sh1.4 million.

Dealers Say KRA Has No Transparent System

Peterson Waweru, chairperson of the Kenya Association of Motor Dealers, says KRA applies taxes without a clear or consistent framework.

“They sit in a boardroom one day and decide this car is in high demand, let us hike the price,” Waweru said. “There is no real system. We have gone to court to challenge that, but they cannot explain it.”

Waweru added that some rulings produce prices ordinary buyers simply cannot reach. “How can you buy a Suzuki Alto for Sh1 million?” he asked.

Dealers say the increases hit lower and middle-income earners hardest. This group depends most heavily on imported used vehicles.

KRA Defends Its Car Valuation Approach

KRA told ForwardPressKe it has not abandoned the Current Retail Selling Price method. The authority says courts directed it to continue applying that method.

KRA applies motor vehicle taxes under the Common External Tariff. Rates depend on the vehicle’s classification. Import duty stands at 35 per cent of the customs value. Excise duty is 20 per cent for engines not exceeding 1,500cc. Larger petrol and diesel engines attract 35 per cent. A Value Added Tax of 16 per cent also applies.

KRA says it applies the same valuation method to all motor vehicle models.

Importers dispute this directly. They say documents they have shared with ForwardPressKe prove KRA applies different tax figures to identical models within weeks of each other.