Although the 2015 Excise Duty Bill is not yet a law but if passed, Kenyans are expected to dig deeper into their pockets. The Excise Duty is currently 20% of the Excise Value. When the Excise Duty Bill is gazetted, the Excise Duty will not be a percentage of the Excise Value, it will be a fixed rate of Sh200, 000 for cars that are over 3 years old from the date of first registration.
Cars whose Current Retail Selling Price, as set by Kenya Revenue Authority value is over Sh6, 000, 000 will benefit as the Excise Duty at 20% is more than Sh200, 000, yet will be fixed at Sh200, 000. When the Bill is gazetted, for example, duty payable for a 2008 Land Cruiser V8 will drop by over Sh100, 000. Begging the question, if a vehicle costs Sh500, 000 how are the calculations done for it to reach Sh1 million?
It is a fact that if the bill comes to law, buying motor vehicles valued from Sh300, 000 to Sh450, 000 at a levy of Sh200, 000 will push up costs. This may impact negatively on the trade, and at the same time will strain the budget of first time buyers. A step in the right direction for a governmentwhich aims at reducing carbon emissions, higher in older cars.
While the cost of cheaper cars like Vitz, Note, Demio, Passo… are expected to go up by Sh200, 000, expensive cars worth say Sh2 million could come down. Currently excise duty for a Passo is about Sh50, 000. This is to be kept fixed at Sh150, 000 for any car older than three years and Sh100, 000 for cars three years old or less. Do not forget that some other charges are derived from excise duty value. What Members of Parliament did lately was that they amended it so that instead of making the figure Sh200, 000 they reduced it by Sh50, 000 to Sh150, 000 but then again, if it replaces the current formula, buyers of cheaper cars will have to break a bank.
According to a public notice by KRA on excise duty on excisable goods, there are no changes in Excise Duty Rates at the moment. That Excise Duty is paid pursuant to the Fifth Schedule to the Customs and Excise Act Cap 472 of the Laws of Kenya, the Excise Duty Bill 2015 has only been proposed to the National Assembly and until it is duly signed into law, manufacturers and importers of excisable goods shall continue accounting for excise duty on the goods and at the Excise Duty rates specified in the fifth schedule.