On the 1st of July this year, Kenya Revenue Authority (KRA) is set to implement a revised Current Retail Selling Price (CRSP) list for new motor vehicles, marking the first update since 2019.
What Is CRSP?
Ordinarily, for all goods entering Kenya, and the East African Community at large, the Commissioner of Customs has to determine the value of the goods in order to determine the correct amount of any customs duty to be paid on imported goods. This process is called Customs valuation.
For motor vehicles specifically, KRA come up with a Current Retail Selling Price (CRSP) which is the value of a brand-new motor vehicle when it is sold in Kenya. This CRSP is later used to determine the import duty to be paid on the vehicle.
How Does KRA Arrive At This CRSP?
KRA doesn’t just guess the prices. It reaches out to local car dealers who are official franchise holders for different brands. For example: Toyota Kenya for Toyota vehicles, Subaru Kenya for Subaru cars and RMA Motors for Land Rover and Jaguar
These dealers consider production costs, freight charges, insurance, taxes and operation costs before providing official price data for new cars. KRA then compiles these into CRSP schedules.
The CRSP, which is typically reviewed and updated periodically, plays a key role in determining the applicable taxes on imported vehicles. This year’s revision reflects notable market developments, including the introduction of new vehicle models, prevailing economic conditions, and changes in key variables such as exchange rates, import duty, and excise duty.
Legal Basis
Customs valuation is based on the World Trade Organization (WTO) Agreement on Customs Valuation, which has been domesticated under Section 122 and the Fourth Schedule of the East African Community Customs Management Act (EACCMA), 2004. This legal framework outlines the methods used to determine the customs value of imported goods.
How Does The CRSP Affect Car Prices
The CRSP affects the prices of imported cars by directly influencing the amount of import duty payable — since duty is calculated as a percentage of the CRSP (“ad valorem duty”), any increase in the CRSP leads to a higher tax burden, which in turn raises the final price that consumers pay for imported vehicles.
For imported used cars in Kenya, KRA uses the Fall-Back Method, Under this method, the CRSP is adjusted downwards to account for:
- Depreciation (loss of value due to usage),
- Profit margins, and
- Taxes already paid in Kenya.
Therefore, if the CRSP is increased then the import duty to be paid on the motor vehicle also increases effectively increasing the price of the car. For instance, the import duty for a Toyota Vitz Hybrid is expected to rise from Ksh.319,501 to Ksh.508,927 while the duty on the diesel variant of a Mazda Demio will increase from Ksh.244,000 to Ksh.564,000.
Why Now?
In 2020, the KRA attempted to review the CRSP. However, stakeholders in the industry challenged the move via a Petition in Car Importers Association of Kenya v Kenya Revenue Authority & 3 others [2019] KEHC 11878 (KLR) arguing that KRA failed to conduct proper public participation to review the CRSP in consultation with stakeholders to reflect emerging changes in the sector.
The court agreed with the Petitioners prompting KRA to relook its customs valuation process embracing a more transparent and collaborative approach. The upcoming CRSP update — effective 1st July 2025 — is the product of this new approach, balancing regulatory enforcement with market realities and stakeholder input.
Bottom Line
KRA’s new CRSP schedule will significantly impact the cost of importing used motor vehicles into Kenya. While the move is grounded in law and aims to create uniformity and fairness in tax assessment, consumers and importers alike should brace for higher import duties and increased vehicle prices.
As the implementation date approaches, stakeholders in the automotive and importation sectors should prepare for the new tax implications and adjust their pricing, financing, and purchasing strategies accordingly.
Written by: Micheal Muya | Tax Lead, MMW Advocates LLP