The High Court has suspended the Kenya Revenue Authority‘s (KRA) new tax schedule for imported used cars after ruling the agency violated constitutional requirements for public participation.
On May 22, KRA announced a revised Current Retail Selling Price (CRSP) schedule that would considerably increase the tax on cheaper models of vehicles such as the Toyota Vitz or the Mazda Demio.
Some prices would more than double, and the changes were set to take effect on July 1, giving importers just 30 days notice.
Elizabeth Akinyi challenged the implementation in court, arguing KRA failed to meaningfully consult the public despite constitutional requirements. Justice Joe Omido agreed and suspended the new schedule until July 17.
Some of the problems that were outlined in court include:
- Rushed Timeline: Car imports take 3-6 months from order to delivery. Many importers had already committed funds based on 2019 prices, with vehicles already at sea.
- Limited Consultation: KRA claimed stakeholder engagement but only consulted car dealers, excluding consumers and the general public.
- Technical Errors: The new price list contained fundamental mistakes, including missing vehicle models, wrong fuel types, incorrect chassis numbers, and inconsistent values for identical cars.
- Constitutional Violations: The petitioner argued KRA violated Articles 10, 47, and 201 of the Constitution, which require public participation in legislative and public finance processes.
Most vehicles in Kenya are imported second-hand, making this schedule a critical factor in the automotive economy. The changes could shift the balance between new and used car markets and affect vehicle affordability for many Kenyans.
The court will hear the full case by July 17. KRA now has the task of proving that it followed proper consultation procedures or risk having to restart the entire process with genuine public participation.
