The KRA vehicle tax system in Kenya is changing, and it’s sending ripples through the auto industry. As we step into mid-2025, car buyers, importers, and even local assemblers are feeling the heat. If you’re planning to buy, sell, or import a vehicle, this new development isn’t something you can ignore.
According to a May 2025 update from Kenya’s Treasury, the Kenya Revenue Authority (KRA) will now use the Current Retail Selling Price (CRSP) as the basis for taxing imported cars. This has significant implications for all players in the motor vehicle sector.
Previously, taxes on imported cars were based on their Customs Value—essentially the price paid abroad plus freight and insurance. Now, the KRA vehicle tax system in Kenya will assess taxes based on CRSP.
This CRSP method evaluates a car’s value as if it were new, then depreciates that value depending on the car’s age. KRA then applies import duty (25%), excise duty (20-35%), VAT (16%), and Import Declaration Fees on that figure.
Treasury argues this move closes loopholes exploited by undervaluing imports. It also aligns with efforts to boost revenue and create a level playing field for local assemblers.
But not everyone’s convinced. Importers fear this system unfairly inflates the tax burden on used vehicles. In fact, under the new KRA vehicle tax system in Kenya, some importers report paying up to 30% more in taxes.
Car buyers, especially those in the middle-income bracket, are likely to be hit hardest. Kenya’s second-hand vehicle market has long been the go-to for affordable cars. With the new tax structure:
On the flip side, local assemblers like Mobius Motors, DT Dobie, and Isuzu East Africa are expected to benefit. The government’s long-term strategy has been to stimulate local manufacturing.
With higher taxes on used imports, locally assembled vehicles might become more attractive. It’s also worth noting that the government has offered tax breaks and policy support to promote local car production.
This could help the Big Four agenda pillar of manufacturing and job creation. However, market watchers warn that affordability remains a key challenge.
Economist James Kariuki says the policy is a double-edged sword:
“Yes, this new KRA vehicle tax system in Kenya may plug revenue leaks. But we risk pricing out many Kenyans who can’t afford new or locally assembled cars.”
He adds that tax reform should go hand in hand with broader policy review, including road infrastructure and vehicle financing.
Importers argue that the CRSP model lacks transparency. Who determines CRSP? How accurate is KRA’s database? Many fear it could open the door to arbitrary taxation.
In fact, the Car Importers Association of Kenya (CIAK) is lobbying for a public portal where the public can verify CRSP valuations. They also want a grace period for vehicles already en route under the old system.
Navigating the KRA vehicle tax system in Kenya requires preparation. Here are some smart moves:
You can also visit First Time Buying a Car in Kenya? Here’s Your Step-by-Step Guide to get tips on buying your first car.
Yes. The new valuation method applies across the board—including trucks, vans, and pickups. Fleets will become more expensive, affecting logistics and transport sectors.
Firms may delay fleet upgrades or look into local conversion options. This could affect last-mile delivery companies and ride-hailing startups alike.
Industry insiders expect further tweaks before full implementation. Affected stakeholders continue to negotiate for clarity and fairness.
Parliament’s Finance Committee is also expected to issue recommendations by the end of Q2 2025.
Until then, the KRA vehicle tax system in Kenya remains a hot-button issue.
For full details, visit the Kenya Revenue Authority official site and check their customs tariff section for the latest updates. Also checkout New car prices haunt importers as KRA increases duty fees.
The shift to a CRSP-based KRA vehicle tax system in Kenya marks a turning point. While aimed at boosting revenue and promoting local industry, it brings serious challenges for car buyers and importers.
As the market adjusts, buyers must stay informed, plan better, and consider alternative ownership models.
Carvista Africa will continue to bring you trusted updates on Kenya’s auto industry. Stay tuned!
1. What is the KRA vehicle tax system in Kenya?
It’s a new model where taxes on imported vehicles are based on the car’s Current Retail Selling Price, not customs value.
2. How does CRSP affect import duty?
Import duty is calculated as 25% of the CRSP, then adjusted based on age and condition.
3. Are local cars cheaper under this system?
Yes, especially due to government incentives and lower tax margins.
4. Will this affect prices of used cars in Kenya?
Definitely. Prices could rise by 20-30%, especially for older cars.
5. Where can I calculate the new taxes?
You can use KRA’s online calculator or consult a trusted importer.
