The Kenya Revenue Authority (KRA) is calling on the public, professionals, and industry stakeholders to provide feedback on two proposed tax regulations aimed at strengthening local vehicle and motorcycle assembly. The regulations, developed in compliance with the Treasury Cabinet Secretary and in accordance with the Statutory Instruments Act, Cap. 2A, seek to refine tax procedures related to unassembled motor vehicles, trailers, and motorcycles.
These proposed amendments focus on revising the framework governing the importation of Completely Knocked Down (CKD) kits—vehicles and motorcycles imported in parts for local assembly. KRA’s objective is to enhance tax efficiency while ensuring the country’s tax incentives genuinely support the growth of local assembly and manufacturing industries.
A significant amendment in the draft regulations is the updated definition of “unassembled motor vehicles and trailers,” specifying that only CKD units intended for assembly in Kenya will qualify for tax incentives. This move aims to prevent tax evasion schemes where fully assembled vehicles are disguised as CKD kits to avoid higher import duties.
The regulations also propose stricter compliance measures for assemblers, requiring them to submit comprehensive reports on component sourcing to meet local content thresholds. These measures are designed to curb the misuse of the CKD scheme and ensure that local industries genuinely benefit from the incentives provided.
Furthermore, the draft regulations introduce a phased approach for assemblers. Specifically, an authorized assembler using knock-down kits at level 2 for pick-ups will have a maximum period of two years before being required to upgrade to level 3 assembly. This requirement aims to push the industry toward deeper levels of local manufacturing.
The new framework also covers electric vehicles, allowing power electronics such as control systems, lithium-ion batteries, motors, and power inverters to be imported in their original form as supplied by the Original Equipment Manufacturer (OEM). However, other components must comply with specific schedules outlined in the regulations to ensure adherence to quality, safety, and environmental standards.
Stakeholders are encouraged to review the proposed regulations available on the KRA website and submit their comments by February 21, 2025. Submissions can be sent to the Commissioner General, KRA, via post or email at stakeholder.engagement@kra.go.ke.
This public participation phase is essential in refining the tax regulations to reflect diverse perspectives and align them with Kenya’s broader industrialization and economic growth goals.
