Kenya used car dealers pay KSh 49 billion in tax annually: Impressive fact or a government's exaggeration?

04/27/2019

Posted by: Joshua-Philip Okeafor

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Do Kenyan used car dealers really pay up the incredible amount of KSh 49 billion or $5m in import and excise tax each year. The debate is raging. Check Naijauto analysis here!

How true is the KSh49 billion ($4.8m) import tax Kenya’s used car dealers claim they pay annually? Since the new draft national automotive policy made by Kenya government, which limits the age and make of used cars that are imported into the country, Kenya’s used car dealers have not had it so easy. The Kenya Auto Bazaar Association, made up of  traders who import and sell used cars, recently employed the pages of national newspapers to make an appeal to the Presidency that they are: “contributing to the national government in excess of KSh49 billion in taxes annually, Please Mr President, please don’t shut us out,”

Kenyan-car-dealers

Kenyan used car dealers contribute significantly to IGR, but are the figures true

Kenyan used car dealers, like their Nigerian counterparts, sell cheaper, foreign used vehicles to its citizens, as many Africans cannot afford a new car. Confirming how true this amount is, the press contacted the auto association’s chairperson Major (Rtd) John Kipchumba, who signed the appeal with his secretary, Charles Munyori. Munyori stated that the association did not have tax figures, which are published, but instead they made an estimation of the figure. Speaking on how they arrived at the figure, he said:

“What we did is that we worked on some figures. The number of imports, so the number of used vehicles that are imported into the country every year, and then we took the average duty.”

He said that  KSh450,000 ($4,455) which is the “average tax” they paid to import a typical 1,500 cc engine capacity saloon car. Speaking on the claim, Alex Murage, who is the director at professional services firm PwC Kenya, stated that though cars with engine 1,500cc may be common in the state,  it shouldn't be used to calculate the average import taxes as that figure the dealers arrived at should be calculated in detail.

Used-car-ad

Africans depend on used car dealers like this to buy cheap vehicles

The tax agency, through their spokesman, Paul Agonda, revealed to the press that the agency only received KSh 47.2 billion ($4.6m) in tax on all imported vehicles, which includes both the new cars and the used cars in 2016/2017, while KSh 47.4 billion totaled it in 2017/2018.

As it was finally unveiled, the KSh49 billion import tax that the Kenya used car dealers association claimed it paid on used car tax yearly is actually incorrect as only KSh 47.4 billion tax was collected as of 2017/2018 for both new and used cars.

It seems our neighbors really know how to spend their money

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Joshua-Philip Okeafor
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Joshua-Philip Okeafor

Joshua-Philip Okeafor

Car buying & selling

Joshua, or KK as friends call him, is a Filmmaker, Writer and Director. A Christian, Joshua is a product of Nigeria’s foremost film school, the National Film Institute, Jos, where he majored in Writing/Directing. Joshua began his writing career at age 18 when an older brother gave him a four page outline of a children novel. Joshua intends to keep writing and directing. His screen name is sometimes Joshua Kalu Ephraim (Writing), and sometimes Joshua KK (directing).

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